Jung, Hae Won (Henny)
[Verfasser:in]
;
Kadyrzhanova, Dalida
[Sonstige Person, Familie und Körperschaft];
Subramanian, Ajay
[Sonstige Person, Familie und Körperschaft]
Capital Structure Under Imperfect Product Market Competition
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments July 11, 2018 erstellt
Beschreibung:
We show how product market competition affects capital structure by developing a tractable model that embeds the tradeoff between the tax benefits and bankruptcy costs of debt in an industry equilibrium setting with heterogeneous, imperfectly competitive firms. Different determinants of competition—fixed production costs and product substitutability—have contrasting implications for the effects of competition on firm leverage. Firms in more competitive industries with greater product substitutability are more leveraged, whereas firms in more competitive industries with lower fixed production costs have lower leverage. We show robust support for our predictions in our empirical analysis of U.S. nonfinancial firms