Capital structure and product markets interactions: evidence from business cycles

• 成果类型: Article
• 署名作者: Campello, M
• 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/S0304-405X(03)00070-9
• 发表日期: 2003
• 页码: 353-378
• 关键词: product markets; capital structure; business cycles; industry rivalry; markups

摘要

This paper provides firm- and industry-level evidence of the effects of capital structure on product market outcomes for a large cross-section of industries over a number of years. The analysis uses shocks to aggregate demand as surrogates for exogenous changes in the product market environment. I find that debt financing has a negative impact on firm (relative-to-industry) sales growth in industries in which rivals are relatively unlevered during recessions, but not during booms. In contrast, no such effects are observed for firms competing in high-debt industries. At the industry level, markups are more countercyclical when industry debt is high. The cyclical dynamics I find for firm sales growth and for industry markups are consistent with Chevalier and Scharfstein's (American Economic Review (1996)) prediction that firms which rely heavily on external financing are more likely to cut their investment in market share building in response to negative shocks to demand and that the competitive outcomes resulting from such actions depend on the financial structures of their industry rivals. (C) 2003 Elsevier Science B.V. All rights reserved.