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

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  • LUIGI ZINGALES

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 Center for Research in Security Prices, Graduate School of Business, University of Chicago in its series CRSP working papers with number 336.

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Handle: RePEc:wop:chispw:336
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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

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  7. Schmidt, Peter & Sickles, Robin C, 1984. "Production Frontiers and Panel Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(4), pages 367-374, October.
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  12. Stulz, ReneM., 1990. "Managerial discretion and optimal financing policies," Journal of Financial Economics, Elsevier, vol. 26(1), pages 3-27, July.
  13. Edward I. Altman, 1973. "Predicting Railroad Bankruptcies in America," Bell Journal of Economics, The RAND Corporation, vol. 4(1), pages 184-211, Spring.
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  16. Chevalier, Judith A, 1995. " Do LBO Supermarkets Charge More? An Empirical Analysis of the Effects of LBOs on Supermarket Pricing," Journal of Finance, American Finance Association, vol. 50(4), pages 1095-1112, September.
  17. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
  18. Myers, Stewart C, 1984. " The Capital Structure Puzzle," Journal of Finance, American Finance Association, vol. 39(3), pages 575-592, July.
  19. Rose, Nancy L, 1987. "Labor Rent Sharing and Regulation: Evidence from the Trucking Industry," Journal of Political Economy, University of Chicago Press, vol. 95(6), pages 1146-1178, December.
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  23. Moore, Thomas Gale, 1978. "The Beneficiaries of Trucking Regulation," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 327-343, October.
  24. Breen, Denis A, 1977. "The Monopoly Value of Household-Goods Carrier Operating Certificates," Journal of Law and Economics, University of Chicago Press, vol. 20(1), pages 153-185, April.
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