Delayed Creative Destruction: How Uncertainty Shapes Corporate Assets

We show how uncertainty shapes the asset allocation, composition, productivity, and value of capital-intensive firms. do so using detailed, near-universal data on shipping firms’ new orders, secondary-market transactions, demolition ships. Firms curtail both acquisition disposal vessels in response to heightened uncertainty. The mechanism operates primarily through cuts ship orders older ships — decisions that are costlier reverse vis-a-vis deals used market. These dynamics more pronounced when secondary markets illiquid, as firms face stronger incentives delay their decisions. rise Somali pirate attacks 2009–2011 is a shock well-defined sectors corroborate our findings. Critically, prompts concentrate fleets into narrower, less productive portfolios, leading losses. Our work novel showing hampers creative destruction, slowing adoption innovation embodied capital old capital.