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Costs of Financial Distress: The German Evidence


  • Carsten Reimund

    (Handelshochschule Leipzig (HHL), Lehrstuhl Finanzmanagement und Banken, Jahnallee 59, D-04109 Leipzig)

  • Bernhard Schwetzler

    (Handelshochschule Leipzig (HHL), Lehrstuhl Finanzmanagement und Banken, Jahnallee 59, D-04109 Leipzig)

  • Florian Zainhofer

    (Handelshochschule Leipzig (HHL), Lehrstuhl Finanzmanagement und Banken, Jahnallee 59, D-04109 Leipzig)


In this paper we aim to verify the existence of costs of financial distress (cfd) for a sample of German CDAX firms using an ex-post approach originally due to Opler/Titman (1994). In contrast to this US-based study we do not find a significant interaction between high leverage and distress for German firms: firms in distressed industries with high ex ante leverage do not display lower sales growth than their ex-ante lower levered counterparts.

Suggested Citation

  • Carsten Reimund & Bernhard Schwetzler & Florian Zainhofer, 2009. "Costs of Financial Distress: The German Evidence," Credit and Capital Markets, Credit and Capital Markets, vol. 42(1), pages 93-123.
  • Handle: RePEc:kuk:journl:v:42:y:2009:i:1:p:93-123

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    More about this item

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation


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