Capital structure under collusion

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Capital Structure Under Collusion ...
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Universidad de Montevideo, Facultad de Ciencias Empresariales y Economía, Departamento de Economía
Date
2019
Extensión
50 p.
Abstract
We analyze the financial leverage of firms that collude to soften product market competition, by forming a cartel. We find that cartel firms have lower leverage during collusion periods. This is consistent with the idea that cartel firms strategically reduce leverage to make their cartels more stable, because high leverage makes deviations from a cartel agreement more attractive. Given that cartels have a large economic footprint, their study is also relevant for the capital structure literature, which has largely ignored the role of anti-competitive behavior.
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Documentos de trabajo
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Documentos de trabajo del Departamento de Economía
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Attribution-NonCommercial-NoDerivatives 4.0 Internacional
Except where otherwise noted, this item's license is described as Attribution-NonCommercial-NoDerivatives 4.0 Internacional