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Debt and firms' relationships: the Italian evidence
journal contributionposted on 2006-05-30, 10:09 authored by Claudio Piga
Theories that predict the strategic use of debt by players engaged in a vertical relationship are tested using an empirical model of debt usage. It is found that firms selling mainly to other firms are characterised on average by a higher level of debt. No evidence supports the notion that buyers increase their leverage to commit themselves not to behave opportunistically towards their suppliers. The results in the paper also suggest that group organisation limits the incentive to use debt strategically within the holding-subsidiaries relationship.
- Business and Economics
CitationPIGA, C., 2002. Debt and firms' relationships: the Italian evidence. Review of Industrial Organization, 20, pp.267-282.
Publisher© Kluwer (Springer)
NotesThis is Restricted Access. This article was published in the journal, Review of Industrial Organization [© Springer] and is available at: http://www.springerlink.com/openurl.asp?genre=journal&issn=0889-938X.