Leverage, Competition, and Financial Distress Hazard: Non-Monotonic Effects in the Presence of Agency Costs
Mehmet Ugur (),
Edna Solomon and
No 28304, Greenwich Papers in Political Economy from University of Greenwich, Greenwich Political Economy Research Centre
This paper investigates the effects of leverage and product-market competition on financial distress in the presence of agency costs. We demonstrate that leverage and competition have non-monotonic and substitute disciplining effects on managerial slack and financial distress hazard. We take account of potential endogeneity due to the correlation of frailty with the regressors and conduct a wide range of sensitivity checks. Our approach bridges the gap between theory and empirics, offers new avenues for financial distress modelling, and can be applied to other event histories such as corporate defaults or credit downgrades.
Keywords: Financial distress; competition; leverage; hazard modelling (search for similar items in EconPapers)
JEL-codes: C23 C25 C41 G30 G33 (search for similar items in EconPapers)
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://gala.gre.ac.uk/id/eprint/28304/1/28304%20UG ... ss%20Hazard_2020.pdf
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://gala.gre.ac.uk/id/eprint/28304/1/28304%20UGUR_Leverage%2C%20Competition%2C%20and%20Financial%20Distress%20Hazard_2020.pdf [302 Moved Temporarily]--> https://gala.gre.ac.uk/id/eprint/28304/1/28304%20UGUR_Leverage%2C%20Competition%2C%20and%20Financial%20Distress%20Hazard_2020.pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:gpe:wpaper:28304
Access Statistics for this paper
More papers in Greenwich Papers in Political Economy from University of Greenwich, Greenwich Political Economy Research Centre Contact information at EDIRC.
Bibliographic data for series maintained by Nadine Edwards ().