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The impact of corporate strategy on capital structure: evidence from Italian listed firms

Francesco Cappa, Giorgio Cetrini and Raffaele Oriani

The Quarterly Review of Economics and Finance, 2020, vol. 76, issue C, 379-385

Abstract: The impact of corporate strategy decisions on capital structure has attracted substantial scholarly and managerial attention from decades, although leading to mixed and inconclusive results until now. While previous studies have focused on the effect brought about by a single strategy at a time, this study tries to reconcile the overall picture of the impact of strategic decisions on capital structure. Based on the Strategy Hierarchy Theory, we estimated the effect brought about by the three strategies determined at the corporate level: internationalization, diversification and integration. The results provide empirical evidence that the above-mentioned strategies impact firms’ capital structure both simultaneously and independently. Integration and internationalization are negatively related with debt ratio while diversification is positively related with debt ratio. The findings of our paper contribute to enrich the strategy/capital-structure literature, and provide academics and managers a clearer understanding of the effect brought about by the corporate strategy on capital structure.

Keywords: Capital structure; Corporate strategy; Integration; Diversification; Internationalization (search for similar items in EconPapers)
JEL-codes: L10 G30 G32 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:76:y:2020:i:c:p:379-385

DOI: 10.1016/j.qref.2019.09.005

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