Hadlock, Charles J.; Sonti, Ramana - In: Journal of Financial and Quantitative Analysis 47 (2012) 01, pp. 179-211
We study the role of financial strength on product market competition by examining exogenous shocks to a firm’s liability structure arising from asbestos litigation. We find that exogenous increases (decreases) in asbestos liabilities are interpreted by the market as negative (positive) news...