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
Date Written: October 1, 2019
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: Suggested Citation