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On the Interactions between Capital Structure and Product Markets.A Survey of the Literature


  • T. Franck
  • N. Huyghebaert


This paper surveys capital structure theories based on product characteristics and the structure of input and output markets. In this manner, it extends the work of Harris and Raviv (1991). Simultaneously, we relate capital structure to decisions in the input and output markets, such as production and pricing, investments, and entry and exit. We briefly discuss each of the central papers in these literatures and relate them to the other models. Next, we present the known empirical evidence that either supports or rejects these models. Finally, we offer our conclusions and elaborate on this review article’s implications for future research.

Suggested Citation

  • T. Franck & N. Huyghebaert, 2004. "On the Interactions between Capital Structure and Product Markets.A Survey of the Literature," Review of Business and Economic Literature, KU Leuven, Faculty of Economics and Business, Review of Business and Economic Literature, vol. 0(4), pages 727-787.
  • Handle: RePEc:ete:revbec:20040407

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