Financial Contagion Channels: Market Microstructure Evidence from Lehman Brothers’ Bankruptcy

Chakrabarty, Bidisha; Zhang, Gaiyan

doi:10.2139/ssrn.1572183

Cited by 3 publications

(1 citation statement)

References 2 publications

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“…is result is empirically confirmed by Jorion and Zhang [71] through manually collecting information of bankruptcies occurred during 1999 to 2005. Sui and Li [72] argued that guarantee relationships are determinant for corporate risk contagions in most cases, while Chakrabarty and Zhang [73] highlighted influence of market structure on risk contagions. Besides, other factors including income structure [74], topology of corporate networks [75], and industrial environment [76] are proved to be playing important roles in corporate risk contagion.…”

Section: Corporate Risk Contagionmentioning

confidence: 99%

Entrepreneurs’ Social Network and Corporate Risk Contagion: A Dynamic Evaluation and Simulation Approach

Yang

Qian

2020

Complexity

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Interactions of entrepreneurs through social networks provide an available path for corporate risk contagions. However, the issue how entrepreneurs’ social networks influence on corporate risk contagion is still received limited attention from scholars. In this study, a framework is proposed to describe entrepreneurs’ interaction and corporate value creation. The main results of multiagent simulations indicate the following. First, either weak ties or strong connections of social networks can enhance density of corporate risk contagion. However, only strong connections can be moderated by entrepreneurs’ risk preference. Second, weak ties improve risk exposure of individual corporations, while strong connections may probably decrease systematical risk of the market. Third, weak ties are important for mature corporations to achieve business success. However, for startups, strong connections are more valuable to maintain. The findings of this study not only provide theoretical support from some widely accepted economic phenomenon but also provide explanations for conflicting results from some previous literatures.

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