Why leverage affects pricing

• 成果类型: Article
• 署名作者: Pichler, Pegaret; Stomper, Alex; Zulehner, Christine
• 署名单位: Massachusetts Institute of Technology (MIT); University of Vienna
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhn048
• 发表日期: 2008
• 页码: 1733
• 关键词: product market competition; capital structure; Financial structure; oligopoly; BEHAVIOR; EXIT

摘要

We explain and provide evidence for effects of leverage on pricing. Our model identifies two effects that either counteract or reinforce each other, depending on the debt maturity structure: (i) firms set higher prices (underinvest in market share) if they have more debt, and (ii) firms engage in dynamic risk-shifting by setting lower (higher) prices if the current debt obligation will be higher (lower) in the next period than in the present period. Using a unique dataset of owner-managed hotels in Austrian ski resorts, we provide empirical evidence of both effects.