Southville International School and Colleges Search for 'su:"Capital structure"'

Employee representation and financial leverage / by Chen Lin, Thomas Schmid, Yuhai Xuan

Amsterdam Elsevier 2018 .
Pages 303-324 , Abstract We analyze how direct employee voice affects financial leverage. German law mandates that firms’ supervisory boards consist of an equal number of employees’ and owners’ representatives. This requirement, however, applies only to firms with more than two thousand domestic employees. We exploit this discontinuity and the law’s introduction in 1976 for identification and find that direct employee power increases financial leverage. This is explained by a supply side effect: as banks’ interests are similar to those of employees, higher employee power reduces agency conflicts with debt providers, leading to better financing conditions. These findings reveal a novel mechanism of direct employee influence.

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Protection of trade secrets and capital structure decisions / by Sandy Klasa, Hernán Ortiz-Molina, Matthew Serfling, Shweta Srinivasan

Amsterdam Elsevier 2018 .
Pages 266-286 , Abstract Firms strategically choose more conservative capital structures when they face greater competitive threats stemming from the potential loss of their trade secrets to rivals. Following the recognition of the Inevitable Disclosure Doctrine by US state courts, which exogenously increases the protection of a firm's trade secrets by reducing the mobility of its workers who know its secrets to rivals, the firm increases its leverage relative to unaffected rivals. The effect is stronger for firms with a greater risk of losing key employees to rivals, for those facing financially stronger rivals, and for those in industries where competition is more intense.

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Flexible Prices and Leverage

By Francesco D'Actuno, Ryan Liu, Carolin Pflueger, & Micheal Weber.
CL | elsevier 2018 .
CL , Journal of Financial Economics

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Financing as a supply chain: The capital structure of banks and borrowers /

By Will Gornall & Ilya A. Strebulaev.
elsevier 2018 .
pages 510-530, September 2018

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