Journal of Financial Economics Vol. 129 No. 1 2018

Flexible prices and leverage

Francesco D’Acunto¹; Ryan Liu²; Carolin Pflueger³; Michael Weber⁴

¹ Boston College · ² Crimson Capital Partners, New York City, NY, USA · ³ University of British Columbia · ⁴ University of Chicago

Abstract

The frequency with which firms adjust output prices helps explain persistent differences in capital structure across firms. Unconditionally, the most flexible-price firms have a 19% higher long-term leverage ratio than the most sticky-price firms, controlling for known determinants of capital structure. Sticky-price firms increased leverage more than flexible-price firms following the staggered implementation of bank deregulation across states and over time, which we use in a difference-in-differences strategy. Firms’ frequency of price adjustment did not change around the deregulation.

DOI

10.1016/j.jfineco.2018.03.009

Volume

129

Issue

1

Pages

46-68

Language

en

Sources

openalex crossref bibtex:phds-export.bib

Cite

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