Role of Industry Position in Capital Structure: Evidence from Korea
3
조회
0
다운로드
0
인용
0
참고문헌
키워드
초록
This paper examines how capital structure relates to industry factors and whether financial decisions are jointly determined within competitive industries by using non-financial firms listed in the Korean Stock Exchange. Based on previous evidence, Maksimovic and Zechner (1991) show that firms can choose between a “safe” technology with a certain marginal cost and a “risky” technology with an uncertain cost. In partial equilibrium, no debt is issued since shareholders would expropriate bondholders by picking the risky technology. In this paper, I find that industry and group factors beyond the standard industry fixed effects are also important to firm capital structure. Firm financial leverage, capital intensity, and cash flow risk are interdependent decisions that depend on a firm’s proximity to the median industry capital-labor ratio and its status as entrant. These findings support competitive industry equilibrium models of capital structure in which debt, technology, and risk are simultaneous decisions.
Abstract
This paper examines how capital structure relates to industry factors and whether financial decisions are jointly determined within competitive industries by using non-financial firms listed in the Korean Stock Exchange. Based on previous evidence, Maksimovic and Zechner (1991) show that firms can choose between a “safe” technology with a certain marginal cost and a “risky” technology with an uncertain cost. In partial equilibrium, no debt is issued since shareholders would expropriate bondholders by picking the risky technology. In this paper, I find that industry and group factors beyond the standard industry fixed effects are also important to firm capital structure. Firm financial leverage, capital intensity, and cash flow risk are interdependent decisions that depend on a firm’s proximity to the median industry capital-labor ratio and its status as entrant. These findings support competitive industry equilibrium models of capital structure in which debt, technology, and risk are simultaneous decisions.
참고문헌 (43)
- Intra-Industry Capital Structure Dispersion:How Do C apital S tructures Differ Among C ompetitors, "Almazan, Andres", University of Texas at Austin, ~ (2001)
- On the Debt Capacity of Growth Options, "Barclay, Michael J.", University of Rochester, ~ (2001)
- Bertrand, Marianne, "Managing with Style: The Effect of Managers on Firm Policies" (2001), University of Chicago.
- Bradley, Michael, "On the Existence of an Optimal Financial structure", Journal of Finance, 39(3), pp.857~878 (1984)
- Brander, James A., "Oligopoly and Financial Structure : The Limited Liability Effect", American Economic Review, 76(5), pp.956~970 (1986)
- Chaplinsky, Susan,, "The Economic Determinants of Leverage: Theories and Evidence", Ph.D., pp.1983
- Chevalier, Judith,, "Debt and Product Market Competition : Local Market Entry, Exit, and Expansion Decisions of Supermarket chains", American Economic Review, 85, pp.415~435 (1995)
- Dammon, Robert, "The Effect of Taxes and Depreciation on Corporate Investment and Financial Leverage", Journal of Finance, 48(2), pp.357~373 (1988)
- Fama, Eugene F., "Testing Trade-Off and Pecking Order Predictions About Dividends and Debt", Review of Financial Studies, 15(1), pp.1~33 (2002)
- Ferson, Wayne, "Finite Sample Properties of the Generalized Method of Moments in Tests of Conditional Asset Pricing Models", Journal of Financial Economics, 36, pp.29~55 (1994)
- Fischer, Edwin O., "Dynamic Capital Structure Choice : Theory and Tests", The Journal of Finance, 44(1), pp.19~40 (1989)
- Testing the Pecking Order Theory of Financial Structure, "Frank, Murray", University of British Columbia and HKUST, ~ (2001)
- Flannery M., "Partial adjustment toward target capital structures", Journal of Financial Economics, 79, pp.469~506 (2006)
- Fries, Stephen, "Debt in Industry Equilibrium", Review of Financial Studies, 10(1), pp.39~67 (1997)
- Graham, John, "Debt and the Marginal Tax Rate", Journal of Financial Economics, 41, pp.41~73 (1996)
- Graham, John, "Proxies for the Marginal Tax Rate", Journal of Financial Economics, 42, pp.187~222 (1996)
- Graham, John,, "How Big Are the Tax Benefits of Debt?", Journal of Finance, 55, pp.1901~1941 (2000)
- Graham, John, "The Theory and Practice of Corporate Finance : Evidence from the Field", Journal of Financial Economics, 60, pp.187~243 (2001)
- Hansen, L. P., "Large Sample Properties of Generalized Method of Moments Estimators", Econometrica, 34, pp.646~660 (1982)
- Harris, Milton, "The Theory of Financial structure", Journal of Finance, 46, pp.297~355 (1991)
- Kim, W. S., "Evidence on the Impact of the Agency Costs of Debt on Corporate Dept Policy", Journal of Financial and Quantitative Analysis, 21(2), pp.131~144 (1986)
- Kovenock, Dan, "Increased Debt and Product-Market Rivalry : How Do We Reconcile Theory and Evidence", American Economic Review, 85(2), pp.403~408 (1995)
- Kovenock, Dan, "Financial structure and Product Market Behavior : An Examination of Plant Exit and Investment", Review of Financial Studies, 10(3), pp.767~804 (1997)
- Lang, Larry, "Leverage, Investment and Firm Growth", Journal of Financial Economics, 40, pp.3~29 (1996)
- Leamer, Edward D., "Handbook of Econometrics, Volume I" (1983), North-Holland
- Leland, Hayne,, "Agency Costs, Risk Management, and Financial structure", Journal of Finance, 53(4), pp.1213~1243 (1998)
- Long, M. S., "Corporate Capital Structures in the United States" (1985), University of Chicago Press
- Lyandres, Evgeny,, "Strategic Choices of Capital Structures in Oligopolies: Theory and Evidence" (2001), University of Rochester.
- MacKay, Peter,, "Real Flexibility and Financial Structure : An Empirical Analysis", Review of Financial Studies, 16(4), pp.1131~1165 (2003)
- Maksimovic, Vojislav, "Debt, Agency Costs, and Industry Equilibrium", Journal of Finance, 46, pp.1619~1643 (1991)
- Maksimovic, Vojislav, "Asset Efficiency and the Reallocation Decisions of Bankrupt Firms", Journal of Finance, 53, pp.1495~1532 (1998)
- Miller, Merton H., "Debt and Taxes", Journal of Finance, 32, pp.261~275 (1977)
- Myers, S., "The Financial Structure Puzzle", Journal of Finance, 39, pp.575~592 (1984)
- Myers, S, "Still Searching for the Optimal Financial Structure, in Are the Distinctions Between Debt and Equity Disappearing?", Federal Reserve Bank of Boston Conference, pp.80~95 (1989)
- Newey, Whitney K., "A Simple, Positive Semi-Definite, Heteroscedasticity and Autocorrelation Consistent Covariance Matrix", Econometrica, 55, pp.703~708 (1987)
- Opler, Tim, "Financial Distress and Corporate Performance", Journal of Finance, 49(3), pp.1015~1040 (1994)
- Parrino, Robert, "Measuring Investment Distortions Arising from Stockholder-Bondholder Conflicts", Journal of Financial Economics, 53, pp.3~42 (1999)
- Phillips, Gordon M., "Increased Debt and Industry Product Markets : An Empirical Analysis", Journal of Financial Economics, 37, pp.189~238 (1995)
- Rajan, Raghuram, "What Do We Know about Financial Structure? Some Evidence from International Data", Journal of Finance, 50(5), pp.1421~1460 (1995)
- Sharpe, Stephen,, "Financial Market Imperfections, Firm Leverage, and the Cyclicality of Employment", American Economic Review, 84(4), pp.1060~1074 (1994)
- Titman, Sheridan, "The Determinants of Financial Structure Choice", Journal of Finance, 41(1), pp.1~19 (1988)
- Welch, Ivo,, "Columbus’ Egg: The Real Determinant of Capital Structure", pp.2002
- Williams, Joseph,, "Financial and Industrial Structure with Agency", Review of Financial Studies, 8(2), pp.431~474 (1995)