EconPapers    
Economics at your fingertips  
 

Corporate governance, product market competition and dynamic capital structure

Ya-Kai Chang, Yu-Lun Chen, Robin K. Chou and Tai-Hsin Huang

International Review of Economics & Finance, 2015, vol. 38, issue C, 44-55

Abstract: Although the importance of both product market competition on managerial slack and the impact of corporate governance on capital structure decisions have been widely discussed in many of the prior related studies, it appears that very little attention has been paid to the effect of market competition on the relationship that exists between corporate governance and capital structure dynamics. Based upon an examination of this relationship in the present study, we find that product market competition increases the incentives for firms with weak governance structures to maximize the wealth of shareholders, thereby increasing the adjustment speed toward target leverage. Furthermore, the difference in such adjustment speed between firms with weak and strong governance structures is found to be smaller among firms operating in the highly competitive industries.

Keywords: Product market competition; Corporate governance; Capital structure; Speed of adjustment (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1059056015000064
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:reveco:v:38:y:2015:i:c:p:44-55

DOI: 10.1016/j.iref.2014.12.013

Access Statistics for this article

International Review of Economics & Finance is currently edited by H. Beladi and C. Chen

More articles in International Review of Economics & Finance from Elsevier
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-05-02
Handle: RePEc:eee:reveco:v:38:y:2015:i:c:p:44-55