search query: @indexterm BUSINESS CYCLES / total: 529
reference: 99 / 529
| Author: | Campello, M. |
| Title: | Capital structure and product markets interactions: evidence from business cycles |
| Journal: | Journal of Financial Economics
2003 : JUN, VOL. 68:3, p. 353-378 |
| Index terms: | Capital structure of companies Business cycles Marketing |
| Language: | eng |
| Abstract: | The author finds that debt financing has a negative impact on firm 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 highdebt industries. At the industry level, markups are more countercyclical when industry when industry debt is high. The cyclical dynamics the author finds for firm sales growth and for industry markups are consistent with Chevalier and Schafstein's (Amer. Econ. Rev. 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. |
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