Debt, bargaining, and credibility in firm-supplier relationships

• 成果类型: Article
• 署名作者: Hennessy, Christopher A.; Livdan, Dmitry
• 署名单位: University of California System; University of California Berkeley
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2008.05.006
• 发表日期: 2009
• 页码: 382-399
• 关键词: Leverage; Debt overhang; bargaining; implicit contracts

摘要

We examine optimal leverage for a downstream firm relying on implicit (self-enforcing) contracts with a supplier. Performing a leveraged recapitalization prior to bargaining increases the firm's share of total surplus. However, the resulting debt overhang limits the range of credible bonuses, resulting in low input quality. Optimal financial structure trades off bargaining benefits of debt within efficiency resulting from overhang. Consistent with empirical evidence, the model predicts that leverage increases with supplier bargaining power (e. g., unionization rates) and decreases with utilization of non-verifiable inputs (e. g., human capital). (C) 2009 Elsevier B.V. All rights reserved.