Chapter 13 CAPITAL STRUCTURE AND CORPORATE STRATEGY

CHRIS. PARSONS

McGill University

SHERIDAN. TITMAN

University of Texas

Abstract

In this chapter we review and discuss empirical studies that examine how a firm’s financing choice affects its strategic decisions and relationships with its nonfinancial stakeholders, such as its customers or workforce. Generally, high leverage appears to inhibit a firm’s ability or willingness to compete aggressively, especially against wellfinanced competitors. Debt also ...

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