The Impact of Debt Financing on Entry and Exit in a Duopoly
This article investigates the interaction between market entry, company foreclosure, and capital structure in a duopoly. We find that the order in which firms foreclose is determined not only by differences in firm-specific factors, but also by common economic factors, such as the interest rate and the market profit volatility. We extend the exit model by allowing financially distressed firms to renegotiate their debt contracts through a one-off debt exchange offer. We find that firms with high bankruptcy costs or with prospects of profit improvement can get bigger reductions on their debt repayments. Investigating market entry, we find that financial vulnerability of the incumbent induces earlier entry. Article published by Oxford University Press on behalf of the Society for Financial Studies in its journal, The Review of Financial Studies.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Volume (Year): 14 (2001)
Issue (Month): 3 ()
|Contact details of provider:|| Postal: Oxford University Press, Journals Department, 2001 Evans Road, Cary, NC 27513 USA.|
Web page: https://academic.oup.com/rfs
More information through EDIRC
|Order Information:||Web: http://www4.oup.co.uk/revfin/subinfo/|
When requesting a correction, please mention this item's handle: RePEc:oup:rfinst:v:14:y:2001:i:3:p:765-804. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.