Graduation Year

Fall 2010

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts



Reader 1

Eric Helland


The website, Plastic Jungle, is taking advantage of the rapidly growing gift card phenomena by creating a secondary market that enables consumers to buy, sell, and exchange gift cards online at a discount. This paper examines the relationship between this secondary gift card market and the corporate bankruptcy risk of companies with gift cards listed on the market. When a company issues a gift card, the card is unsecured debt and the cardholder becomes an unsecured creditor to the company. This paper investigates whether the cardholder acts similarly to other unsecured creditors or as someone who is merely holding another form of cash. As was expected, this paper finds evidence indicating the spot price on the gift card is correlated to some forms of bankruptcy risk. Specifically, the gift cardholders act like unsecured creditors in terms of excess stock returns, CDS price, and the idiosyncratic risk of companies.