Is There an Optimal Industry Financial Structure?

Peter MacKay and Gordon Phillips

No 9032, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine how intra-industry variation in financial structure relates to industry factors and whether real and financial decisions are jointly determined within competitive industries. We find that industry and group factors beyond standard industry fixed effects are also important to firm financial structure. Firm financial leverage, capital intensity, and cash-flow risk are interdependent decisions that depend on the firm's proximity to the median industry capital-labor ratio, the actions of firms within its industry quintile, and its status as entrant, incumbent, or exiting firm. Our results support competitive industry equilibrium models of financial structure in which debt, technology, and risk are simultaneous decisions.

JEL-codes: G3 (search for similar items in EconPapers)
Date: 2002-06
Note: CF PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

Published as MacKay, Peter and Gordon M. Phillips. “How Does Industry Affect Firm Financial Structure?” The Review of Financial Studies (December 2005).

Downloads: (external link)
http://www.nber.org/papers/w9032.pdf (application/pdf)

Related works:
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:nbr:nberwo:9032

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w9032

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().