Debt choice in the regulated competition era

Raymond M.K. Wong, Cephas Simon Peter Dak-Adzaklo and Agnes W.Y. Lo

Journal of International Money and Finance, 2024, vol. 142, issue C

Abstract: We examine the impact of intensifying competition laws on corporate debt financing choice. Analogous to the argument that intensifying competition spurs improvements in corporate governance, which decreases the demand for bank monitoring and hence bank debt, we find a negative association between stringent competition laws and bank debt reliance. This effect is amplified for firms with lower information quality, firms in concentrated industries, and firms in countries with weaker institutional environments. Additional analyses show that the bank debt-reducing effect of competition increases overall firm value, which demonstrate the value-enhancing effect of regulated competition. Our study is contributory to the recent debate on reforming competition laws to promote economic growth.

Keywords: Public and private debt markets; Competition laws; Corporate governance (search for similar items in EconPapers)
JEL-codes: G15 G32 G34 G38 M41 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0261560624000329
Full text for ScienceDirect subscribers only

Related works:
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: https://EconPapers.repec.org/RePEc:eee:jimfin:v:142:y:2024:i:c:s0261560624000329

DOI: 10.1016/j.jimonfin.2024.103045

Access Statistics for this article

Journal of International Money and Finance is currently edited by J. R. Lothian

More articles in Journal of International Money and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().