Abstract

http://ssrn.com/abstract=1864183
 
 

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Capital Structure Along the Supply Chain: How Does Customer Leverage Affect Supplier Leverage Decisions?


Yongqiang Chu


University of South Carolina - Moore School of Business

Liying Wang


University of South Carolina

May 2, 2011

Midwest Finance Association 2012 Annual Meetings Paper

Abstract:     
We examine the leverage relationship of firms along the supply chain and find that suppliers' leverage is positively related to their customers' leverage. Moreover the positive leverage relationship is stronger if the customer firms have more bargaining power or if the supply chain requires less relation-specific investments. Our results suggest that firms use leverage as a bargaining tool against their suppliers or customers, and the importance of relation-specific investment reduces firm's incentive to use leverage for bargaining.

Number of Pages in PDF File: 38

Keywords: Capital structure, supply chain, Customers

JEL Classification: L14, G32

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Date posted: June 15, 2011 ; Last revised: January 27, 2012

Suggested Citation

Chu, Yongqiang and Wang, Liying, Capital Structure Along the Supply Chain: How Does Customer Leverage Affect Supplier Leverage Decisions? (May 2, 2011). Midwest Finance Association 2012 Annual Meetings Paper. Available at SSRN: http://ssrn.com/abstract=1864183 or http://dx.doi.org/10.2139/ssrn.1864183

Contact Information

Yongqiang Chu (Contact Author)
University of South Carolina - Moore School of Business ( email )
1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States
803-777-5960 (Phone)
Liying Wang
University of South Carolina ( email )
349 Gambrell Hall
Columbia, SC 29208
United States
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