Stakeholder Theory, Market Structure and the Firm's Capital Structure: An Empirical Evidence
37 Pages Posted: 2 Sep 2003
A new literature linking capital structure and factor-product markets has been under focus in the last few years. This literature relates some elements of the modern financial theory to the stakeholder theory, market structure, and firm's strategic behavior. In this paper, we will examine the interactions between capital structure and factor-product markets through a system of simultaneous equations with panel data. Our data set contains a sample of Spanish manufacturing firms between 1993 and 1999. We specify a financial leverage equation that depends mainly on factor-product markets. Moreover, we specify a second equation to analyze how product market concentration is affected by financial leverage, among other things. Finally, capital structure was empirically showed to affect and be affected by factor-product markets.
Keywords: Capital structure, factor-product markets, simultaneous equations
JEL Classification: G32, L11, C33
Suggested Citation: Suggested Citation