Asset specificity, firm heterogeneity and capital structure
Article Abstract:
The relationship between capital structure and firm strategy is studied. An examination of 295 firms across 30 industrial sectors confirms that investment in firm-specific assets has a far greater influence on capital structure than do intra- or inter-industry structural characteristics. Such assets, which are often intangible and difficult to redeploy, constrain a firm's ability to assume debtsince they are not usually accepted as collateral. Thus, a firm's management ofits borrowings becomes a crucial factor in determining its strategy, which is dependent on the ability of the firm to invest in the assets and skills needed to ensure competitiveness. As such, the presence of firm-specific effects in the sample of firms provides empirical proof that capital structure is linked to strategy, and, in turn, to the assets and skills needed to achieve strategicgoals.
Publication Name: Strategic Management Journal
Subject: Business
ISSN: 0143-2095
Year: 1993
User Contributions:
Comment about this article or add new information about this topic:
Specificity and opacity as resource-based determinants of capital structure: evidence for Spanish manufacturing firms
Article Abstract:
Issues discussed concern the impact of strategic investments on a corporation's financial policy, focusing on strategic resources in Spanish manufacturing firms. The resource-based conception of the firm is discussed, which posits that an understanding of corporate strategy and performance are enhanced by exploring the distinctive factors that make up a firm's resources.
Publication Name: Strategic Management Journal
Subject: Business
ISSN: 0143-2095
Year: 2001
User Contributions:
Comment about this article or add new information about this topic:
The choice of entry mode in sequential foreign direct investment
Article Abstract:
This article presents a model of a business' foreign investment strategy, focusing on the choice of entry mode into the foreign market. The model studies the sequence of investments into the US' chemical and electronics industries from 1975-1992 by European and Japanese investors.
Publication Name: Strategic Management Journal
Subject: Business
ISSN: 0143-2095
Year: 2001
User Contributions:
Comment about this article or add new information about this topic:
- Abstracts: Auditor market share, product differentiation and audit fees. Evolution of the application of present value to valuation of non-monetary resources
- Abstracts: Market globalization and the stability of financial and credit sectors. Enhancing European competitiveness
- Abstracts: The safety dance. The young and the resourceful
- Abstracts: The credit view, financial announcements and interest rate responses. Market risk and the concept of fundamental volatility: Measuring volatility across asset and derivative markets and testing for the impact of derivatives markets on financial markets
- Abstracts: The arbitrage pricing theory, macroeconomic and financial factors, and expectations generating processes. Valuing the strategic option to sell life insurance business: Theory and evidence