Debt financing: Does it boost or hurt firm performance in product markets?

• 成果类型: Article
• 署名作者: Campello, Murillo
• 署名单位: University of Illinois System; University of Illinois Urbana-Champaign
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2005.04.001
• 发表日期: 2006
• 页码: 135-172
• 关键词: capital structure; Product market competition; Industry concentration; endogeneity; gmm

摘要

Previous research seeks to establish whether debt boosts or hurts a firm's product market performance. This paper proposes that both of these outcomes can be observed: debt can boost and hurt performance. I first model a nonmonotonic relation between debt-like finance and competitive conduct. I then empirically examine the within-industry relation between leverage and sales performance using data from 115 industries over 30 years. My tests deal with the endogencity of debt in a novel fashion: I use creditors' valuation of assets in liquidation to identify financial leverage. I find that moderate debt taking is associated with relative-to-rival sales gains; high indebtedness, however, leads to product market underperformance. (c) 2005 Elsevier B.V. All rights reserved.