Author:
Jayanti Rama K.,Jayanti S.V.
Abstract
PurposeThe purpose of this paper is to explore the influence of bankruptcies on the market share effects of rival firms in the airline industry.Design/methodology/approachEmploying event study methodology, the authors examine the impact of bankruptcies on major and minor airlines by analyzing four different types of events: filing for bankruptcy by major carriers; coming out of bankruptcy by major carriers; shutdown by major carriers; and filing of bankruptcy by minor carriers.FindingsEmpirical results indicate that filing for bankruptcy by major carriers and shutdown by major carriers resulted in positive abnormal returns around the announcement dates for rival firms, while coming out of bankruptcy by major carriers resulted in negative impact. As expected, the last type of events involving filing for bankruptcy by minor carriers resulted in insignificant abnormal returns.Originality/valueThe results point to the importance of systematically incorporating bankruptcies by competitive firms in estimating and forecasting market demand. The results provide a diagnostic tool to evaluate what kind of contingencies necessitate planning for unexpected spikes in market share.
Reference27 articles.
1. Besanko, D., Dubé, J. and Gupta, S. (2005), “Own‐brand and cross‐brand retail pass‐through”, Marketing Science, Vol. 24 No. 1, pp. 123‐37.
2. Borenstein, S. (2005), “US domestic airline pricing, 1995‐2004”, Working Paper No. CPC05‐48, UC Berkeley Competition Policy Center, Berkeley, CA.
3. Brown, S.J. and Warner, J.B. (1985), “Using daily stock returns: the case of event studies”, Journal of Financial Economics, Vol. 14, pp. 3‐32.
4. Buzzell, R.D. and Gale, B.T. (1987), The PIMS Principles: Linking Strategy to Performance, Free Press, New York, NY.
5. Chang, S. and Singh, H. (2000), “Corporate and industry effects on business unit competitive position”, Strategic Management Journal, Vol. 21 No. 7, pp. 739‐52.
Cited by
9 articles.
订阅此论文施引文献
订阅此论文施引文献，注册后可以免费订阅5篇论文的施引文献，订阅后可以查看论文全部施引文献