Structural capital and capital structure: assessing horizontal ownership concentration

Sumit K. Majumdar

European Competition Journal, 2021, vol. 17, issue 3, 507-541

Abstract: This paper reports an assessment of horizontal ownership concentration, contingent on congeneric acquisitions, on firm-level strategic behaviour in the telecommunications sector. Consequent to deals, the change in the concentration index was over one and half times the value of the original ratio. An asset control Herfindahl Hirschman Index (AHHI) shot up from 1056 to 2747. Firms' strategic behaviour examined has been debt level in capital structure. Companies associated with a high value of the structural capital variable have had significantly lower debt, around 24% less than average, while companies associated with a low value of the structural capital variable have had significantly higher debt, of around 11% more than average. Companies identified as owned by horizontal ownership controllers with high market power have had significantly lower debt, of around 19% less than average. The behaviour of companies have been competitively aggressive, as an outcome of horizontal ownership concentration.

Date: 2021
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DOI: 10.1080/17441056.2021.1911730

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