Capital Structure under Collusion

66 Pages Posted: 1 Dec 2016 Last revised: 1 Feb 2018

See all articles by Giorgo Sertsios

Giorgo Sertsios

Universidad de los Andes, Chile

Daniel Ferrés

Universidad de Montevideo

Gaizka Ormazabal

University of Navarra, IESE Business School

Paul Povel

University of Houston - Department of Finance, C.T. Bauer College of Business

Multiple version iconThere are 2 versions of this paper

Date Written: January 23, 2018

Abstract

We study the financial leverage of firms that collude in their product markets by forming a cartel. We find that cartel firms have lower financial leverage during collusion years. This is consistent with the theory that low financial leverage helps make illegal cartel agreements more stable. The literature has largely ignored this possible role of capital structure, but understanding the decisions of cartel firms is important, given their surprisingly large economic footprint.

Keywords: Capital Structure, Financial Leverage, Financial Policies, Collusion, Cartels, Trigger Strategies

JEL Classification: G32, L12

Suggested Citation

Sertsios, Giorgo and Ferrés, Daniel and Ormazabal, Gaizka and Povel, Paul, Capital Structure under Collusion (January 23, 2018). Available at SSRN: https://ssrn.com/abstract=2877374 or http://dx.doi.org/10.2139/ssrn.2877374

Giorgo Sertsios

Universidad de los Andes, Chile ( email )

Mons. Álvaro del Portillo
Las Condes
Santiago, 12.455
Chile

Daniel Ferrés

Universidad de Montevideo ( email )

Puntas de Santiago 1604
Montevideo, Montevideo 11500
Uruguay

Gaizka Ormazabal

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

Paul Povel (Contact Author)

University of Houston - Department of Finance, C.T. Bauer College of Business ( email )

University of Houston
334 Melcher Hall
Houston, TX 77204
United States
713-743-4759 (Phone)

HOME PAGE: http://www.bauer.uh.edu/povel

Register to save articles to
your library

Register

Paper statistics

Downloads
106
rank
250,443
Abstract Views
689
PlumX Metrics
!

Under construction: SSRN citations will be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information