Economics at your fingertips  

Flexible prices and leverage

D’Acunto, Francesco, Ryan Liu, Carolin Pflueger and Michael Weber ()

Journal of Financial Economics, 2018, vol. 129, issue 1, 46-68

Abstract: The frequency with which firms adjust output prices helps explain persistent differences in capital structure across firms. Unconditionally, the most flexible-price firms have a 19% higher long-term leverage ratio than the most sticky-price firms, controlling for known determinants of capital structure. Sticky-price firms increased leverage more than flexible-price firms following the staggered implementation of bank deregulation across states and over time, which we use in a difference-in-differences strategy. Firms’ frequency of price adjustment did not change around the deregulation.

Keywords: Capital structure; Nominal rigidities; Bank deregulation; Industrial organization and finance; Price setting; Bankruptcy (search for similar items in EconPapers)
JEL-codes: E12 E44 G28 G32 G33 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Flexible Prices and Leverage (2017) Downloads
Working Paper: Flexible Prices and Leverage (2017) Downloads
Working Paper: Flexible Prices and Leverage (2017) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Journal of Financial Economics is currently edited by G. William Schwert

More articles in Journal of Financial Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2019-10-11
Handle: RePEc:eee:jfinec:v:129:y:2018:i:1:p:46-68