We study how firms respond to an unexpected demand shock, exploiting the 2006 boycott of Danish products after publication of Muhammad caricatures. On average, affected firms lose the majority of their exports to Muslim countries and experience a significant decrease in total sales. However, firms with low financial leverage redirect sales to new and existing product-destination markets in non-Muslim countries, which allows them to fully offset their losses. In contrast, high-leverage firms do not enter new markets and instead actively downsize. Our results highlight the importance of financial flexibility in times of crisis, consistent with declarations of practitioners.

中文翻译：

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债务的灵活性成本：卡通危机期间的丹麦出口商

我们利用 2006 年穆罕默德漫画出版后对丹麦产品的抵制，研究企业如何应对意外的需求冲击。平均而言，受影响的企业失去了对穆斯林国家的大部分出口，并且总销售额大幅下降。然而，财务杠杆较低的公司将销售转向非穆斯林国家的新的和现有的产品目的地市场，这使他们能够完全抵消损失。相比之下，高杠杆企业不会进入新市场，而是积极缩小规模。我们的结果强调了危机时期财务灵活性的重要性，这与从业者的声明一致。