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Survival of the Fittest or the Fattest? Exit and Financing in the Trucking Industry

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Author Info
Zingales, Luigi
Abstract

This paper studies the impact that capital market imperfections have on the natural selection of the most efficient firms by estimating the effect of the pre-deregulation level of leverage on the survival of trucking firms after the Carter deregulation. Highly leveraged carriers are less likely to survive the deregulation shock, even after controlling for various measures of efficiency. This effect is stronger in the imperfectly competitive segment of the motor carrier industry. High debt seems to affect survival by curtailing investments and reducing the price per-ton-mile that a carrier can afford to charge after deregulation.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1778.

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Date of creation: Jan 1998
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Handle: RePEc:cpr:ceprdp:1778

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Related research
Keywords: Capital Structures; Product Market Competition; trucking industry;

Find related papers by JEL classification:
G3 - Financial Economics - - Corporate Finance and Governance
L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
L9 - Industrial Organization - - Industry Studies: Transportation and Utilities

Cited by:
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  1. Dalida Kadyrzhanova, 2005. "Predatory Governance," Computing in Economics and Finance 2005 421, Society for Computational Economics. [Downloadable!]
  2. Atreya Chakraborty & Mark Kazarosian, 1999. "Product Differentiation and the Use of Information Technology: New Evidence from the Trucking Industry," Boston College Working Papers in Economics 433, Boston College Department of Economics. [Downloadable!]
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  3. Neelam Jain & Thomas D. Jeitschko & Leonard J. Mirman, 2001. "Financial Intermediation and Entry Deterrence," Tinbergen Institute Discussion Papers 01-037/2, Tinbergen Institute. [Downloadable!]
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  4. Xavier Boutin & Giacinta Cestone & Chiara Fumagalli & Giovanni Pica & Nicolas Serrano-Velarde, 2009. "The Deep-Pocket Effect of Internal Capital Markets," CSEF Working Papers 217, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 05 Oct 2009. [Downloadable!]
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  5. Hongbin Li & Weiying Zhang & Li-An Zhou, 2005. "Ownership, Efficiency, and Firm Survival in Economic Transition: Evidence from a Chinese Science Park," Discussion Papers 00008, Chinese University of Hong Kong, Department of Economics. [Downloadable!]
  6. Jens Köke, 2002. "Dynamics in ownership and firm survival: Evidence from corporate Germany," MEA discussion paper series 02013, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
  7. Giacinta Cestone, 1999. "Corporate Financing and Product Market Competition: An Overview," CSEF Working Papers 18, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy. [Downloadable!]
  8. Se-Jik Kim, 2003. "Macro Effects of Corporate Restructuring in Japan," IMF Working Papers 03/203, International Monetary Fund. [Downloadable!]
  9. Brana, Sophie & Maurel, Mathilde, 1999. "Barter in Russia: Liquidity Shortage Versus Lack of Restructuring," CEPR Discussion Papers 2258, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  10. Baggs, Jennifer, 2004. "Changing Trade Barriers and Canadian Firms: Survival and Exit After the Canada-U.S. Free Trade Agreement," Analytical Studies Branch Research Paper Series 2004205e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
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