The Need for Speed: The Impact of Capital Constraints on Strategic Misconduct

66 Pages Posted: 13 Feb 2024

See all articles by F. Christopher Eaglin

F. Christopher Eaglin

Duke University, Fuqua School of Business

Date Written: October 3, 2023

Abstract

This study analyzes the impact of reducing capital constraints on strategic misconduct in the South African minibus taxi industry measured by their propensity to speed and crash. I find that lower interest rates, a proxy for capital constraints, decrease the most severe forms of misconduct by the average owner-operator. Qualitative interviews and survey data suggest that this result is attributable to owner-operators’ efforts to avoid default. These results contribute to our understanding of firm strategies when facing financial pressure, highlighting the implications of affordable financing for firm behavior.

Keywords: Misconduct, Emerging Markets, Strategy, Capital Constraints

JEL Classification: M13, O17, D22

Suggested Citation

Eaglin, F. Christopher, The Need for Speed: The Impact of Capital Constraints on Strategic Misconduct (October 3, 2023). Available at SSRN: https://ssrn.com/abstract=4703027 or http://dx.doi.org/10.2139/ssrn.4703027

F. Christopher Eaglin (Contact Author)

Duke University, Fuqua School of Business ( email )

Departments of Classical Studies & Philosophy
Durham, NC 27708
United States

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