March 24, 2023Financially troubled U.S. hospitals are petitioning for more support from the federal government, but handouts won’t fix the underlying problem.
September 22, 2022Exceptions may prove the rule, but they must first be explained. That is why finance researchers are drawn to the distress anomaly-- a well-documented phenomenon that challenges the risk-return paradigm in equity markets. Generally, higher-risk investments are expected to yield higher returns than safer, more stable securities. In recent years, however, studies have shown that high-credit-risk securities for companies in distress – i.e. when their already-low credit rating is being downgraded -- realize abnormally low returns compared to non-distressed securities of the same or lower risk. Academics have proposed a range of rationales for this puzzle. Alexander Philipov, finance area chair and associate professor at George Mason University, says they mainly fall into two categories.
