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Monetary policy shocks and distressed firms’ stock returns: Evidence from the publicly traded U.S. firms

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  • Kim, Seon Tae
  • Rescigno, Luca

Abstract

We study U.S. firms’ stock-return sensitivities to monetary policy shocks over the 2001–2015 period. Expansionary monetary shocks disproportionately increase returns of a distressed firm which has profit substantially smaller than its interest expense and is in need of external financing.

Suggested Citation

  • Kim, Seon Tae & Rescigno, Luca, 2017. "Monetary policy shocks and distressed firms’ stock returns: Evidence from the publicly traded U.S. firms," Economics Letters, Elsevier, vol. 160(C), pages 91-94.
    • Handle: RePEc:eee:ecolet:v:160:y:2017:i:c:p:91-94
    DOI: 10.1016/j.econlet.2017.09.009
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    References listed on IDEAS

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    More about this item

    Keywords

    Monetary policy shock; Stock returns; Distressed firm; External financing;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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