Anticollusion Enforcement: Justice for Consumers and Equity for Firms

Review of Financial Studies, 2019, vol 32, pp 2587–2624

62 Pages Posted: 14 Oct 2019

See all articles by Sudipto Dasgupta

Sudipto Dasgupta

Lancaster University

Alminas Zaldokas

Hong Kong University of Science & Technology (HKUST) - Department of Finance

Date Written: October 1, 2019

Abstract

We consider the case of changing competition that comes from stronger antitrust enforcement around the world to show that, as the equilibrium switches from collusion to oligopolistic competition, firms step up investment and increase equity issuance. As a result, debt ratios fall. These results imply the importance of financial flexibility in surviving competitive threats. Our identification relies on a difference-in-differences estimation based on the staggered passage of leniency programs in 63 countries around the world from 1990 to 2012.

Keywords: collusion, leniency laws, leverage, debt issuance, equity issuance

JEL Classification: D22, D43, G32, G38, L44

Suggested Citation

Dasgupta, Sudipto and Zaldokas, Alminas, Anticollusion Enforcement: Justice for Consumers and Equity for Firms (October 1, 2019). Review of Financial Studies, 2019, vol 32, pp 2587–2624. Available at SSRN: https://ssrn.com/abstract=3462616

Sudipto Dasgupta

Lancaster University ( email )

Lancaster LA1 4YX
United Kingdom

Alminas Zaldokas (Contact Author)

Hong Kong University of Science & Technology (HKUST) - Department of Finance ( email )

Clear Water Bay, Kowloon
Hong Kong

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