Running on Empty? Financial Leverage and Product Quality in the Supermarket Industry

• 成果类型: Article
• 署名作者: Matsa, David A.
• 署名单位: Northwestern University
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.3.1.137
• 发表日期: 2011
• 页码: 137-173
• 关键词: capital-market imperfections; consumer; INVESTMENT; debt; firm; Heterogeneity; transactions; determinants; performance; constraints

摘要

This paper examines whether debt financing can undermine a supermarket firm's incentive to provide product quality In the supermarket industry, product availability is an important measure of a retailer's quality. Using US consumer price index microdata to track inventory shortfalls, I find that taking on high financial leverage increases shortfalls. Highly leveraged firms appear to be degrading their products' quality in order to preserve current cash flow for debt service. Although reducing quality can erode both current sales and customer loyalty firms appear to be willing to risk these outcomes in order to achieve benefits associated with debt finance. (JEL D92, G31, G32, L15, L81)