UCL Department of Economics


Finance Seminar- Sam Antill (HBS)

15 March 2023, 4:00 pm–5:15 pm

UCL Campus

Consumer Choice and Corporate Bankruptcy

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Ming Yang

Abstract: Using incentivized randomized experiments, we estimate the causal effect of a Chapter 11 bankruptcy filing on consumer demand for the bankrupt firm's products. Knowledge of a firm's bankruptcy reduces a consumer's willingness to pay by 18-35%, depending on the industry. We show evidence that consumers fear both (i) a liquidation preventing future relationships with a firm and (ii) a decline in quality while a firm reorganizes. Estimating a structural model of consumer demand, we quantify the large negative impact of bankruptcy on consumer welfare and a bankrupt firm's market share.


Location: B20 Jevons LT, Drayton House or Zoom

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