Capital Structure and Product Markets Interactions PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download Capital Structure and Product Markets Interactions PDF full book. Access full book title Capital Structure and Product Markets Interactions by Murillo Campello. Download full books in PDF and EPUB format.
Author: Murillo Campello Publisher: ISBN: Category : Languages : en Pages : 32
Book Description
This paper provides firm- and industry-level evidence on the effects of capital structure on product market outcomes for a large cross-section of industries. The analysis uses shocks to aggregate demand as surrogates for exogenous changes in the product market environment, dealing with concerns about the endogenous nature of the relation between financial structure and competitive performance. I find that debt financing has a negative impact on firm (relative-to-industry) sales growth in industries where rivals are relatively unlevered during recessions, but not during booms. In contrast, no such effects are observed for firms competing in high-debt industries. At the industry level, I find that markups are more countercyclical when industry debt is high. The cyclical dynamics I find for firm sales growth and for industry markups are consistent with Chevalier and Scharfstein's (1996) prediction that firms that rely more heavily on external financing are more prone to boost short-term profits at the expense of future sales in response to negative shocks to demand, and that the competitive outcomes resulting from such actions depend on the financial structures of their industry rivals.
Author: Murillo Campello Publisher: ISBN: Category : Languages : en Pages : 32
Book Description
This paper provides firm- and industry-level evidence on the effects of capital structure on product market outcomes for a large cross-section of industries. The analysis uses shocks to aggregate demand as surrogates for exogenous changes in the product market environment, dealing with concerns about the endogenous nature of the relation between financial structure and competitive performance. I find that debt financing has a negative impact on firm (relative-to-industry) sales growth in industries where rivals are relatively unlevered during recessions, but not during booms. In contrast, no such effects are observed for firms competing in high-debt industries. At the industry level, I find that markups are more countercyclical when industry debt is high. The cyclical dynamics I find for firm sales growth and for industry markups are consistent with Chevalier and Scharfstein's (1996) prediction that firms that rely more heavily on external financing are more prone to boost short-term profits at the expense of future sales in response to negative shocks to demand, and that the competitive outcomes resulting from such actions depend on the financial structures of their industry rivals.
Author: Sadok El Ghoul Publisher: ISBN: Category : Languages : en Pages : 46
Book Description
An extensive body of international business research examines how cross-country variations in legal institutions influence corporate finance practices. Building on this literature, as well as the literature on capital structure and product market interactions, we investigate the effect of an important dimension of legal institutions - creditor rights - on the product market performance of highly leveraged firms. Using a sample of 37,422 firms from 60 countries over the 1989-2016 period, we find that strong creditor protection benefits less leveraged firms, but adversely affects highly leveraged firms by increasing the adverse responses of customers, competitors, and employees. The adverse effect of creditor rights on the costs of high leverage is more pronounced for firms in countries with developed debt markets and banking systems, but mostly insignificant for firms in countries with developed equity markets and low information asymmetry. Our study offers new insights to the international business literature and contributes to the debate on the role of creditor protection by uncovering a potential cost based on capital structure and product market interactions.
Author: Ahmed Riahi-Belkaoui Publisher: Praeger ISBN: Category : Business & Economics Languages : en Pages : 238
Book Description
This text uses theoretical and contingency approaches to examine the question of whether capital structure can be determined. Using a bond rating model it looks at the evaluation of capital structure, the resolution of issues pertaining to equity and liabilities, and their contribution to reports
Author: Abdulaziz Istaitieh Publisher: ISBN: Category : Languages : en Pages : 38
Book Description
The objective of this work is to offer a theoretical overview of the literature that links capital structure and factor-product markets, in order to show what we do know about these connections. This literature relates some elements of the modern financial theory to the stakeholder theory, industrial organization, and firm's strategic management. Three main points could be highlighted. First, the relevant role of non-financial stakeholders in capital structure design. Second, the interactions existing between capital structure and market structure. Third, the two-direction effect between the firm's capital structure and its strategic behavior in product markets.
Author: Dirk Hackbarth Publisher: ISBN: Category : Languages : en Pages : 52
Book Description
We study how interactions between financing and investment decisions can shape firm boundaries in dynamic product markets. In particular, we model a new product market opportunity as a growth option and ask whether it is best exploited by a large incumbent firm (Integration) or by a separate, specialized firm (Non-Integration). Starting from a standard theoretical framework, in which value-maximizing corporate investment and financing decisions are jointly determined, we show that Integration best protects assets in place value, while Non-Integration best protects the value of the growth option and maximizes financial flexibility. These forces drive different organizational equilibria depending on firm and product market characteristics. In particular, we show that increases in standard measures of cash flow risk predict exploitation of new opportunities by specialized firms, while increases in product market risk (i.e., the risk of preemption by competitors) predict exploitation by incumbents. We also show that alliances organized as licensing agreements or revenue sharing contracts sometimes better balance the different sources of value, and thus may dominate more traditional forms of organization. These key results arise from the dynamic interaction of the new opportunity's option-like features with realistic competitive forces.The appendices for this paper are available at the following URL: "http://ssrn.com/abstract=2443868" http://ssrn.com/abstract=2443868.
Author: David J. Smith Publisher: ISBN: Category : Languages : en Pages : 50
Book Description
We investigate whether the capital structure of New Zealand firms influences their product-market performance in the period from 1984 to 2008. Our main findings are that the use of leverage by publicly listed New Zealand companies leads to an increase in relative-to-industry sales growth, but a decrease in relative-to-industry return on assets (ROA). We also conduct a reverse causality test by examining whether sales growth and ROA influence leverage. We find no evidence that sales growth has an impact on the use of debt, but significant evidence that ROA is negatively correlated with its use. Our results suggest that New Zealand firms use debt to compete more aggressively in their product markets, even though this strategy comes at a cost of lower relative-to-industry profitability. A possible explanation for this behaviour is the more competitive trading environment that has developed in New Zealand over the last 25 years.
Author: Abdulaziz Istaitieh Publisher: ISBN: Category : Languages : en Pages : 37
Book Description
A new literature linking capital structure and factor-product markets has been under focus in the last few years. This literature relates some elements of the modern financial theory to the stakeholder theory, market structure, and firm's strategic behavior. In this paper, we will examine the interactions between capital structure and factor-product markets through a system of simultaneous equations with panel data. Our data set contains a sample of Spanish manufacturing firms between 1993 and 1999. We specify a financial leverage equation that depends mainly on factor-product markets. Moreover, we specify a second equation to analyze how product market concentration is affected by financial leverage, among other things. Finally, capital structure was empirically showed to affect and be affected by factor-product markets.
Author: Gordon M. Phillips Publisher: DIANE Publishing ISBN: 9781568069142 Category : Business & Economics Languages : en Pages : 62
Book Description
Tests whether capital structure influences product market competition between firms that have sharply increased the debt in their capital structure.
Author: Murillo Campello
Author: Murillo Campello
Author: Sadok El Ghoul
Author: Ahmed Riahi-Belkaoui
Author: Abdulaziz Istaitieh
Author: Dirk Hackbarth
Author: Carl O'Donnell
Author: David J. Smith
Author: Abdulaziz Istaitieh
Author: Gordon M. Phillips
Author: Abdulaziz M. Istaitieh