Product Market Competition And Debt Choice

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Product Market Competition and Debt Choice

Author : Sabri Boubaker
Publisher :
ISBN 13 :
Total Pages : 50 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Product Market Competition and Debt Choice by : Sabri Boubaker

Download or read book Product Market Competition and Debt Choice written by Sabri Boubaker and published by . This book was released on 2018 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: Motivated by prior research on the informational and monitoring role of product market competition, we examine how competitive pressure affects firms' choice between bank debt and public debt. Using a sample of 3,675 U.S. firms over the period 2001-2013, we find that competitive pressure from the product market leads firms to rely less on bank debt financing. In a natural experiment setting, we also find that there is a significant decrease in firm reliance on bank debt after large import tariff reductions. In additional analyses, we show that the effect of competitive pressure on debt choice is more pronounced for firms with greater exposure to competition, higher financial constraints, and weaker governance practices. Moreover, we find that product market competition is associated with long-term maturity debt. Taken together, our study generates the important insight that external governance pressure from the product market acts as an alternate governance mechanism for bank debt monitoring.

Increased Debt and Product Market Competition

Author : Gordon M. Phillips
Publisher : DIANE Publishing
ISBN 13 : 9781568069142
Total Pages : 62 pages
Book Rating : 4.0/5 (691 download)

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Book Synopsis Increased Debt and Product Market Competition by : Gordon M. Phillips

Download or read book Increased Debt and Product Market Competition written by Gordon M. Phillips and published by DIANE Publishing. This book was released on 1993-07 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: Tests whether capital structure influences product market competition between firms that have sharply increased the debt in their capital structure.

Increased Debt and Product Market Competition

Author : Gordon Martin Phillips
Publisher :
ISBN 13 :
Total Pages : 34 pages
Book Rating : 4.:/5 (269 download)

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Book Synopsis Increased Debt and Product Market Competition by : Gordon Martin Phillips

Download or read book Increased Debt and Product Market Competition written by Gordon Martin Phillips and published by . This book was released on 1991 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Debt, Investment, and Product Market Competition

Author : Matthew J. Clayton
Publisher :
ISBN 13 :
Total Pages : 42 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Debt, Investment, and Product Market Competition by : Matthew J. Clayton

Download or read book Debt, Investment, and Product Market Competition written by Matthew J. Clayton and published by . This book was released on 2008 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent empirical literature on the interaction between capital structure, investment, and product market decisions suggests that debt leads to lower investment expenditures and weaker product market competition. Theoretical literature in this area has been unable to fully explain this finding (perhaps because all theoretical papers look only at two of the above decisions). This paper develops a model which examines all three decisions and shows that debt and investment can be substitutes in a model where firms rationally take on debt. Furthermore, it is demonstrated that when firms compete with prices in the product market, an increase in debt leads to lower investment and higher prices.

Increased Debt and Product Market Competition

Author : Gordon Martin Phillips
Publisher :
ISBN 13 :
Total Pages : 34 pages
Book Rating : 4.:/5 (269 download)

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Book Synopsis Increased Debt and Product Market Competition by : Gordon Martin Phillips

Corporate Governance, Product Market Competition and Debt Financing

Author : Teodora Paligorova
Publisher :
ISBN 13 :
Total Pages : 39 pages
Book Rating : 4.:/5 (872 download)

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Book Synopsis Corporate Governance, Product Market Competition and Debt Financing by : Teodora Paligorova

Download or read book Corporate Governance, Product Market Competition and Debt Financing written by Teodora Paligorova and published by . This book was released on 2014 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Product Market Competition and Collateralized Debt

Author : Vittoria Cerasi
Publisher :
ISBN 13 :
Total Pages : 31 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Product Market Competition and Collateralized Debt by : Vittoria Cerasi

Download or read book Product Market Competition and Collateralized Debt written by Vittoria Cerasi and published by . This book was released on 2013 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a model where bank credit depends upon borrowersņ' product market structure. We show that a larger number of competitors in the industry may increase credit availability by enhancing the resale value of the collateralized productive assets. We also study how this benefiĳt of competition is affected by the existence of outsiders willing to bid for the collateralized productive assets of the insiders. Our model encompasses the standard case of Cournot competition either when the default probability goes to zero or when there are multiple outsiders bidding for the productive assets. We test the empirical implications of the theoretical analysis exploiting information on the access to ጿinance of small and medium Italian fiĳrms and fiĳnd supportive evidence.

Product Market Competition and the Financing of New Ventures

Author : Jean-Etienne de Bettignies
Publisher :
ISBN 13 :
Total Pages : 70 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Product Market Competition and the Financing of New Ventures by : Jean-Etienne de Bettignies

Download or read book Product Market Competition and the Financing of New Ventures written by Jean-Etienne de Bettignies and published by . This book was released on 2017 with total page 70 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the interaction between venture risk, product market competition and entrepreneurs' choice between bank financing and venture capital (VC) financing. Under bank financing, a debt-type contract emerges as optimal, which allows the entrepreneur to retain full control of the venture and thus yields strong effort incentives, as long as she can service the debt repayment; but leads to liquidation in case of default, making the venture's success quite sensitive to exogenous, even temporary shocks that may hinder debt repayment. Under VC financing an equity-type contract emerges as optimal, which is not sensitive to exogenous shocks, but requires the entrepreneur to share a fraction of the rents with the financier, thus yielding lower effort incentives for the entrepreneur. There exists a threshold level of venture risk such that bank financing is optimal if and only if venture risk is below that threshold. Product market competition increases the value of stronger entrepreneurial incentives, and thus increases the maximum level of risk the entrepreneur is willing to take before switching from bank financing to VC financing. This is a robust result that is shown to hold in various models of competition, including Hotelling, Salop, Dixit-Stiglitz, Cournot-to-Bertrand switch.

Strategic Use of Corporate Debt Under Product Market Competition

Author : Sasanee Lovisuth
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (757 download)

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Book Synopsis Strategic Use of Corporate Debt Under Product Market Competition by : Sasanee Lovisuth

Download or read book Strategic Use of Corporate Debt Under Product Market Competition written by Sasanee Lovisuth and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial and industrial economists are increasingly recognising the interaction between capital structure and firms' strategies in the product market. A debate exists regarding the nature of the relationship between firms' product market power and financial leverage. Particularly, researchers have asked whether the relationship is positive, negative or non-linear. This thesis contributes to this research agenda by developing game-theoretic models, and conducting empirical tests. Specifically, the thesis examines the effects of market power on a firm's use of long-term debt.

Product Market Competition and Agency Costs

Author : Jennifer Jane Baggs
Publisher :
ISBN 13 : 9780662443018
Total Pages : 42 pages
Book Rating : 4.4/5 (43 download)

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Book Synopsis Product Market Competition and Agency Costs by : Jennifer Jane Baggs

Download or read book Product Market Competition and Agency Costs written by Jennifer Jane Baggs and published by . This book was released on 2006 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Economists have long held the belief that competition improves efficiency. One of the mechanisms suggested is that product market competition alleviates agency costs, which in turn many enable firms to induce higher effort and greater efficiency from their managers. In this way, competition mitigates what Leibenstein (1966) called 'X-inefficiencies.' Despite growing interest, an unambiguous theoretical formulation for this 'vague suspicion' has proved difficult to obtain. In this paper we examine the impact of competition on efficiency both theoretically and empirically. The main theoretical contribution of this paper is to show that product market competition can have a direct, and ambiguously positive effect on managerial incentives."--Unedited text from document.

Optimal Debt Contracts and Product Market Competition with Exit and Entry

Author : Naveen Khanna
Publisher :
ISBN 13 :
Total Pages : 43 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Optimal Debt Contracts and Product Market Competition with Exit and Entry by : Naveen Khanna

Download or read book Optimal Debt Contracts and Product Market Competition with Exit and Entry written by Naveen Khanna and published by . This book was released on 2008 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: We show that optimal debt contracts in the presence of product market competition are typically different from standard debt contracts. We consider a market with two incumbents, one levered (target) and one with deep pockets (competitor). Renewal of target's debt depends on its profits, which are determined by the competitor's pricing strategy. When the competitor benefits from non-renewal of target's debt, it has incentive to price more aggressively. To counter this, bondholders make renewal less profit sensitive, and the optimal debt contract is smooth (nonkinked) and concave, and lies below the standard debt contract. Bondholders leave the limited liability constraint slack in a region of profits, and therefore appear to leave money on the table by failing to collect all profits when they fall short of the debt's face value. But this flattening of the contract results in higher profits for the levered firm for each state of demand, and a higher expected payout for bondholders. The larger the competitor's benefit from non-renewal, the flatter the contract. On the other hand, when the competitor benefits from renewal of the target's debt (say non-renewal results in target's replacement by a more efficient entrant), then the optimal debt contract is nonsmooth (sometimes taking the form of a binary option), and much more profit sensitive for some profit levels than the standard contract. This increased sensitivity amplifies the competitor's incentive to price less aggressively, resulting in higher profits for the levered firm and higher payout to bondholders. In either case, our results demonstrate the optimal contract must be designed accounting for the impact of the contract itself on the profit function of the levered firm. Furthermore, bondholders prefer lending to weaker firms (firms whose competitors benefit from renewal) because the competitor's pricing incentive, amplified by the more profit sensitive contract, results in higher expected payouts.

Product Market Competition and Optimal Debt Contracts

Author : Antoine Faure-Grimaud
Publisher :
ISBN 13 :
Total Pages : 24 pages
Book Rating : 4.:/5 (489 download)

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Book Synopsis Product Market Competition and Optimal Debt Contracts by : Antoine Faure-Grimaud

Download or read book Product Market Competition and Optimal Debt Contracts written by Antoine Faure-Grimaud and published by . This book was released on 1997 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Corporate Payout Policy

Author : Harry DeAngelo
Publisher : Now Publishers Inc
ISBN 13 : 1601982046
Total Pages : 215 pages
Book Rating : 4.6/5 (19 download)

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Book Synopsis Corporate Payout Policy by : Harry DeAngelo

Download or read book Corporate Payout Policy written by Harry DeAngelo and published by Now Publishers Inc. This book was released on 2009 with total page 215 pages. Available in PDF, EPUB and Kindle. Book excerpt: Corporate Payout Policy synthesizes the academic research on payout policy and explains "how much, when, and how". That is (i) the overall value of payouts over the life of the enterprise, (ii) the time profile of a firm's payouts across periods, and (iii) the form of those payouts. The authors conclude that today's theory does a good job of explaining the general features of corporate payout policies, but some important gaps remain. So while our emphasis is to clarify "what we know" about payout policy, the authors also identify a number of interesting unresolved questions for future research. Corporate Payout Policy discusses potential influences on corporate payout policy including managerial use of payouts to signal future earnings to outside investors, individuals' behavioral biases that lead to sentiment-based demands for distributions, the desire of large block stockholders to maintain corporate control, and personal tax incentives to defer payouts. The authors highlight four important "carry-away" points: the literature's focus on whether repurchases will (or should) drive out dividends is misplaced because it implicitly assumes that a single payout vehicle is optimal; extant empirical evidence is strongly incompatible with the notion that the primary purpose of dividends is to signal managers' views of future earnings to outside investors; over-confidence on the part of managers is potentially a first-order determinant of payout policy because it induces them to over-retain resources to invest in dubious projects and so behavioral biases may, in fact, turn out to be more important than agency costs in explaining why investors pressure firms to accelerate payouts; the influence of controlling stockholders on payout policy --- particularly in non-U.S. firms, where controlling stockholders are common --- is a promising area for future research. Corporate Payout Policy is required reading for both researchers and practitioners interested in understanding this central topic in corporate finance and governance.

Product Market Competition, Corporate Governance, and Firm Value

Author : Manuel Ammann
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (838 download)

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Book Synopsis Product Market Competition, Corporate Governance, and Firm Value by : Manuel Ammann

Download or read book Product Market Competition, Corporate Governance, and Firm Value written by Manuel Ammann and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

The Market Concentration Doctrine

Author : Harold Demsetz
Publisher : Washington : American Enterprise Institute for Public Policy Research
ISBN 13 :
Total Pages : 44 pages
Book Rating : 4.3/5 (91 download)

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Book Synopsis The Market Concentration Doctrine by : Harold Demsetz

Download or read book The Market Concentration Doctrine written by Harold Demsetz and published by Washington : American Enterprise Institute for Public Policy Research. This book was released on 1973 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Debt Financing

Author : Murillo Campello
Publisher :
ISBN 13 :
Total Pages : 42 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Debt Financing by : Murillo Campello

Download or read book Debt Financing written by Murillo Campello and published by . This book was released on 2005 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: Research on capital structure-product market interactions has traditionally sought to establish whether debt financing either hurts or boosts firm performance. This paper proposes that both of these competitive outcomes are likely to emerge in an industry setting: debt can hurt and boost a firm's product market performance. To motivate this case, I analyze a simple model implying a non-monotonic relation between a firm's use of external (debt-like) financing and its competitive conduct. I then empirically examine the within-industry relation between corporate debt and sales performance using firm-level data from a panel of 115 industries over 30 years. The testing strategy I implement allows for the marginal effect of debt policies on product market outcomes to vary according to the level of firm/rival indebtedness. Crucially, it addresses concerns with the endogeneity of financing decisions in a novel fashion: I use creditors' valuation of firms' assets in liquidation to identify financial leverage in an empirical model of product market performance. My evidence suggests that moderate (relative-to-industry) firm debt taking is, on the margin, associated with sales gains that obtain at the expense of industry rivals. After some point, however, higher relative indebtedness leads to significant sales underperformance. I also investigate whether financing-performance linkages vary with industry concentration and with firm leadership (market share size). I find that leader (follower) firms in concentrated industries underperform (outperform) their rivals when those firms' leverage ratios exceed the industry norm. In contrast, less leveraged leaders in those same industries observe positive sales-debt sensitivities. Firm debt and leadership positions are less relevant for competitive outcomes in less concentrated markets.

The Theory of Corporate Finance

Author : Jean Tirole
Publisher : Princeton University Press
ISBN 13 : 1400830222
Total Pages : 657 pages
Book Rating : 4.4/5 (8 download)

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Book Synopsis The Theory of Corporate Finance by : Jean Tirole

Download or read book The Theory of Corporate Finance written by Jean Tirole and published by Princeton University Press. This book was released on 2010-08-26 with total page 657 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Magnificent."—The Economist From the Nobel Prize–winning economist, a groundbreaking and comprehensive account of corporate finance Recent decades have seen great theoretical and empirical advances in the field of corporate finance. Whereas once the subject addressed mainly the financing of corporations—equity, debt, and valuation—today it also embraces crucial issues of governance, liquidity, risk management, relationships between banks and corporations, and the macroeconomic impact of corporations. However, this progress has left in its wake a jumbled array of concepts and models that students are often hard put to make sense of. Here, one of the world's leading economists offers a lucid, unified, and comprehensive introduction to modern corporate finance theory. Jean Tirole builds his landmark book around a single model, using an incentive or contract theory approach. Filling a major gap in the field, The Theory of Corporate Finance is an indispensable resource for graduate and advanced undergraduate students as well as researchers of corporate finance, industrial organization, political economy, development, and macroeconomics. Tirole conveys the organizing principles that structure the analysis of today's key management and public policy issues, such as the reform of corporate governance and auditing; the role of private equity, financial markets, and takeovers; the efficient determination of leverage, dividends, liquidity, and risk management; and the design of managerial incentive packages. He weaves empirical studies into the book's theoretical analysis. And he places the corporation in its broader environment, both microeconomic and macroeconomic, and examines the two-way interaction between the corporate environment and institutions. Setting a new milestone in the field, The Theory of Corporate Finance will be the authoritative text for years to come.