Journal of Financial Economics Vol. 37 No. 2 1995
Increased debt and industry product markets an empirical analysis
Abstract
This paper tests for changes in firms' production and pricing decisions in four industries in which firms have sharply increased their financial leverage. The analysis of product price and quantity data shows that industry product market decisions are associated with capital structure. In three industries, output is negatively associated with the average industry debt ratio. In the one industry which shows a positive association between output and debt ratios, rival firms have low financial leverage and entry barriers are relatively low. Analysis of executive compensation data supports the hypothesis that managers' incentives to maximize shareholders' wealth increase following recapitalization.
- DOI
- 10.1016/0304-405x(94)00785-y
- Volume
- 37
- Issue
- 2
- Pages
- 189-238
- Language
- en
- Sources
- crossref bibtex:phds-export.bib openalex