Flexible Prices and Leverage

Francesco D'Acunto, Ryan Liu, Carolin Pflueger, Michael Weber and Michael Weber
Authors registered in the RePEc Author Service: Michael Weber

No 6317, CESifo Working Paper Series from CESifo

Abstract: The frequency with which firms adjust output prices helps explain persistent differences in capital structure across firms. Unconditionally, the most exible-price firms have a 19% higher long-term leverage ratio than the most sticky-price firms, controlling for known determinants of capital structure. Sticky-price firms increased leverage more than exible-price firms following the staggered implementation of the Interstate Banking and Branching Efficiency Act across states and over time, which we use in a difference-in-differences strategy. Firms’ frequency of price adjustment did not change around the deregulation.

Keywords: capital structure; nominal rigidities; bank deregulation; industrial organization and finance; price setting; bankruptcy (search for similar items in EconPapers)
JEL-codes: E12 E44 G28 G32 G33 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-cfn and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Flexible prices and leverage (2018)
Working Paper: Flexible Prices and Leverage (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_6317

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