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| Tekijä: | Campello. M. |
| Otsikko: | Debt financing: does it boost or hurt firm performance in product markets? |
| Lehti: | Journal of Financial Economics
2006 : OCT, VOL. 82;1, p. 135-172 |
| Asiasana: | capital structure of companies company performance debt financing endogenous variables |
| Kieli: | eng |
| Tiivistelmä: | Previous research seeks to establish whether debt boosts or hurts a company's product market performance. This article proposes that both of these outcomes can be observed: debt can boost and hurt performance. The study first models a nonmonotonic relation between debt-like finance and competitive conduct. Then it empirically examines the within-industry relation between leverage and sales performance using data from 115 industries over 30 years. The tests deal with the endogeneity of debt in a novel fashion: creditors' valuation of assets in liquidation is used to identify financial leverage. |
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