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Creative Destruction and Cycles in the US Capital Market: Evidence from Fortune 500 Firms

Author

Listed:
  • Chakraborty, Debojyoti
  • Bhattacharya, Kaushik

Abstract

The paper analyzes the relationship between creative destruction and cycles in the US capital market. Creative destruction in a year is measured by the number of new firms in the Fortune 500 list. Creative destruction is found to be positively associated with smoothed annual returns based on the Dow Jones Index (DJI), signifying that new entries in Fortune 500 tend to be more during boom than during recession years. Easier financing of innovative ideas during boom is hypothesized as a reason behind such positive association.

Suggested Citation

  • Chakraborty, Debojyoti & Bhattacharya, Kaushik, 2009. "Creative Destruction and Cycles in the US Capital Market: Evidence from Fortune 500 Firms," MPRA Paper 27413, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:27413
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    File URL: https://mpra.ub.uni-muenchen.de/27413/1/MPRA_paper_27413.pdf
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    More about this item

    Keywords

    Creative Destruction; Business Cycle.;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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