Capital Structure and Product Market Behavior: An Examination of Plant Exit and Investment Decisions

Dan Kovenock and Gordon Phillips

The Review of Financial Studies, 1997, vol. 10, issue 3, 767-803

Abstract: We examine whether sharp debt increases through leveraged buyouts and recapitalizations interact with market structure to influence plant closing and investment decisions of recapitalizing firms and their rivals. We take into account the fact that recapitalizations and investment decisions are both endogenous and may be simultaneously influenced by the same exogenous events. Following their recapitalizations, firms in industries with high concentration are more likely to close plants and less likely to invest. Rival firms are less likely to close plants and more likely to invest when the market share of leveraged firms is higher. Article published by Oxford University Press on behalf of the Society for Financial Studies in its journal, The Review of Financial Studies.

Date: 1997
References: Add references at CitEc
Citations: View citations in EconPapers (126)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Capital Structure and Product Market Behavior: An Examination of Plant Exit and Investment Decisions (1995)
Working Paper: Capital Structure and Product Market Behavior: An Examination of Plant Exit and Investment Decisions (1995)
Working Paper: Capital Structure and Product Market Behavior: An Examination of Plant Exit and Investment Decisions (1995)
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:oup:rfinst:v:10:y:1997:i:3:p:767-803

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Review of Financial Studies is currently edited by Itay Goldstein

More articles in The Review of Financial Studies from Society for Financial Studies Oxford University Press, Journals Department, 2001 Evans Road, Cary, NC 27513 USA.. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().