Sizing up Corporate Restructuring in the COVID Crisis

Greenwood, Robin; Iverson, Benjamin Charles; Thesmar, David

doi:10.3386/w28104

Cited by 36 publications

(20 citation statements)

References 2 publications

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“…Hence, their performance in the financial period was good and the public's need for information technology increased. This is in accordance with research conducted by Greenwood et al (2020), one of the results of which was that several companies were able to survive during the Covid-19 pandemic. It also proves the truth of several basic economic theories, namely Engel's curve theory, Giffen's goods theory, marginal substitution theory, and opportunity theory.…”

Section: Results and Analysissupporting

confidence: 92%

“…Fourth, Greenwood et al (2020) concluded a wave of financial difficulties experienced by several companies with the result that some companies are able to survive and several others have the potential to face bankruptcy so that they will face potential liquidation or reorganization downsizing up to acquisitions. Overall, there are two main problems, namely legal problems, court congestion and overliquidation, and small firm failures.…”

Section: Literature Reviewmentioning

confidence: 99%

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Jakarta Islamic Index: Covid-19 Pandemic and Potential Financial Distress

Nugroho

Wasiaturrahma

Anggia

2021

JEBIS

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This research aims to analyze the potential for financial distress of Islamic companies that are included in the Jakarta Islamic Index during pandemic of COVID-19, which is using profitability ratios, liability ratios, and liquidity ratios (Zwesky's Model). The sample is quarterly (2019 to 2020) and it is using the Generalized Method of Moments (GMM) panel data model approach that was developed by Arellano and Bond (1991). The results of this study indicate that the profitability ratio has the most influence on corporate financial distress and from the overall this research occurs in the process of decreasing company financial performance during pandemic of COVID-19. Moreover, there is one company that indicates financial distressed, there are twenty-two companies that experienced a decline in financial performance, but there are 7 companies that experiences better financial performance when the COVID-19 pandemic occurred. In one hand, this shows that COVID-19 has a broad effect on the decline in the financial performance of sharia companies. On the other hand, it has a positive impact on certain companies that works specifically in sectors which is related to information technology.

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Section: Results and Analysissupporting

confidence: 92%

Section: Literature Reviewmentioning

confidence: 99%

Jakarta Islamic Index: Covid-19 Pandemic and Potential Financial Distress

Nugroho

Wasiaturrahma

Anggia

2021

JEBIS

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“…Previous studies have shown that higher (lower) bank capital is beneficial (detrimental) for bank shareholders, particularly during crisis episodes(Berger and Bouwman 2013; Cappelletti and others 2020;and Huang, de Haan, and Scholtens 2020). This result is also consistent with a strand of literature showing that credit expansions predict bank equity crash risk(Baron and Xiong 2017;and Gandhi 2018).4 Based on the historical relationship between bankruptcies and unemployment in the United States,Greenwood, Iverson, and Thesmar (2020) show that the pace of business bankruptcy can be expected to increase by 140 percent relative to their 2019 level.©International Monetary Fund. Not for Redistribution…”

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confidence: 75%

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Valencia¹,

Varghese²,

Yao³

et al. 2021

IMF Working Papers

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The policy response to the COVID-19 shock included regulatory easing across many jurisdictions to facilitate the flow of credit to the economy and mitigate a further ampli-fication of the shock through tighter financial conditions. Using an intraday event study,this paper examines how stock prices—a key driver in financial conditions—reacted to regulatory easing announcements in a sample of 18 advanced economies and 8 emerging markets. The paper finds that overall, regulatory easing announcements contributed to looser financial conditions, but effects varied across sectors and tools. Financial regulatory easing led to lower valuations for financial sector stocks, and higher valuations for non-financial sector stocks, particularly for industries that are more dependent on bank financing. Furthermore, valuations declined and financial conditions tightened following announcements related to easier bank capital regulation while equity valuation rose and financial conditions loosened after those about liquidity regulation. Effects from non-regulatory financial measures appear to be generally more muted.

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“…A Federal Reserve Small Business Credit Survey conducted in 2019 asked small-business bankruptcy counts typically include a large number of small businesses. Greenwood, Iverson, and Thesmar (2020) use a simple model to predict that bankruptcies for businesses of all sizes will rise 140 percent from 2019 levels, although according to this simple model, some of this rise should already be evident. How the bankruptcy status of small businesses actually evolves could have big implications on the economic outlook for both employment and investment: Weak small-business growth hindered the recovery from the Great Recession.…”

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confidence: 99%

Which Industries Received PPP Loans?

Borawski

Schweitzer

2021

EC (FRB Cleveland)

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We examine the financial challenges faced by small businesses during the COVID-19 pandemic and estimate the scale of loans provided to small businesses through the Paycheck Protection Program. We find that the program reached businesses throughout the economy, and we estimate that small businesses in most industry sectors received loans equivalent to between 80 percent and 120 percent of 10 weeks of their 2017 payrolls. That said, there are important differences in the distribution of funds across sectors that suggest some businesses had problems accessing loans and that a significant number of firms with more than 500 employees likely used alternative size criteria to qualify for the program.

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Sizing up Corporate Restructuring in the COVID Crisis

Cited by 36 publications

References 2 publications

Jakarta Islamic Index: Covid-19 Pandemic and Potential Financial Distress

Jakarta Islamic Index: Covid-19 Pandemic and Potential Financial Distress

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Which Industries Received PPP Loans?

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