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Flexible Prices and Leverage

Francesco D’Acunto, Ryan Liu, Carolin Pflueger () and Michael Weber ()

No 23066, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The frequency with which firms adjust output prices helps explain persistent differences in capital structure across firms. Unconditionally, the most flexible-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 flexible-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.

JEL-codes: E12 E44 G28 G32 G33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn and nep-mac
Date: 2017-01
Note: CF EFG ME
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Published as Francesco D’Acunto & Ryan Liu & Carolin Pflueger & Michael Weber, 2018. "Flexible prices and leverage," Journal of Financial Economics, .

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Journal Article: Flexible prices and leverage (2018) Downloads
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Working Paper: Flexible Prices and Leverage (2017) Downloads
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