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Inter-industry network and corporate bond recovery rates

Author

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  • Nazemi, Abdolreza
  • Baumann, Friedrich
  • Fabozzi, Frank J.

Abstract

We examine the relationship between the recovery rates of defaulted U.S. corporate bonds and the issuing firm’s position within the U.S. economy’s inter-industry trade network. Our findings reveal that bonds issued by firms in more centrally connected industries typically realize higher recovery rates than those in peripheral industries. This is due to the strong inter-industry trade relationships, which provide a channel for transferring bankruptcy assets to alternative users across industry borders. Moreover, industry-wide distress emerges as a fundamental factor influencing recovery rates, with its effects spreading through the network’s trade connections, thereby reducing recovery rates in neighboring industries.

Suggested Citation

  • Nazemi, Abdolreza & Baumann, Friedrich & Fabozzi, Frank J., 2026. "Inter-industry network and corporate bond recovery rates," Journal of Corporate Finance, Elsevier, vol. 98(C).
    • Handle: RePEc:eee:corfin:v:98:y:2026:i:c:s0929119926000337
    DOI: 10.1016/j.jcorpfin.2026.102975
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    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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