Event

Friends during Hard Times: Evidence from the Great Depression

  • Conférencier  Diego Garcia – University of Colorado at Boulder

  • Lieu

    University of Luxembourg Weicker Building 4, Rue Alphonse Weicker Room B001 (Ground Floor) l-2721 Luxembourg

    LU

  • Thème(s)
    Finance

Abstract

Using a novel dataset of over 3500 public and private firms, we construct the

network of firm connections through executives and directors on the eve of the

1929 financial market crash. We find that more connected firms have higher 10-

year survival rates, on average and using geographic market segmentation for

identification. Consistent with a financing channel, the results are particularly

strong for small firms, private firms, cash-poor firms, and firms located in counties

with high bank suspension rates during the crisis. Moreover, connections to cashrich

firms, but not to cash-poor firms predict survival, overall and among

financially constrained firms.