How capital structure influences diversification performance: A transaction cost perspective
Abstract
Extant theories agree that debt should inhibit diversification but predict opposing performance consequences. While agency theory predicts that debt should lead to higher performance for diversifying firms, transaction cost economics (TCE) predicts that more debt will lead to lower performance for firms expanding into new markets. Our empirical tests on a large sample of Japanese firms support TCE by showing that firms accrue higher returns from...
Paper Details
Title
How capital structure influences diversification performance: A transaction cost perspective
Published Date
Jun 25, 2013
Journal
Volume
35
Issue
7
Pages
1013 - 1031
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