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Is Firm's Productivity Related to its Financial Structure? Evidence from Microeconomic Data

Author

Listed:
  • Francesco Nucci

    (Università di Roma "La Sapienza")

  • Alberto F. Pozzolo

    (Università del Molise
    Ente Luigi Einaudi)

  • Fabiano Schivardi

    (Banca d'Italia, Research Department)

Abstract

Firms undertaking innovative activities typically hold a larger share of immaterial assets and have a different capital structure. Differences in the propensity to innovate are likely to translate in different TFP levels. We use data on a panel of firms to study the relationship between firms' capital structure and TFP. We identify variations in financial structure induced by factors that do not directly affect the share of intangibles and test whether these exogen-ous variations affect productivity. We document a negative relationship between leverage and productivity, consistently with theories of financial structure based on bankruptcy costs, control rights and equityholders-debtholders' conflicts.

Suggested Citation

  • Francesco Nucci & Alberto F. Pozzolo & Fabiano Schivardi, 2005. "Is Firm's Productivity Related to its Financial Structure? Evidence from Microeconomic Data," Rivista di Politica Economica, SIPI Spa, vol. 95(1), pages 269-290, January-F.
    • Handle: RePEc:rpo:ripoec:v:95:y:2005:i:1:p:269-290
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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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