Debt and Firms' Relationships: The Italian Evidence

Debt and Firms' Relationships: The Italian Evidence Theories that predict the strategic use of debt by players engaged in a verticalrelationship are tested using an empirical model of debt usage. It is found thatfirms selling mainly to other firms are characterised on average by a higherlevel of debt. No evidence supports the notion that buyers increase their leverageto commit themselves not to behave opportunistically towards their suppliers. Theresults in the paper also suggest that group organisation limits the incentive to usedebt strategically within the holding-subsidiaries relationship. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Debt and Firms' Relationships: The Italian Evidence

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2002 by Kluwer Academic Publishers
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1023/A:1015047625588
Publisher site
See Article on Publisher Site

Abstract

Theories that predict the strategic use of debt by players engaged in a verticalrelationship are tested using an empirical model of debt usage. It is found thatfirms selling mainly to other firms are characterised on average by a higherlevel of debt. No evidence supports the notion that buyers increase their leverageto commit themselves not to behave opportunistically towards their suppliers. Theresults in the paper also suggest that group organisation limits the incentive to usedebt strategically within the holding-subsidiaries relationship.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 13, 2004

References

  • The Positive Effect of Industrial Districts on the Export Performance of Industrial Firms
    Becchetti, L.; Rossi, S. P.

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