Flexible Prices and Leverage
The frequency with which firms adjust output prices helps explain persistent differences in capital structure across firms. Unconditionally, the most flexible-price firms have a 19% higher long-term leverage ratio than the most sticky-price firms, controlling for known determinants of capital structure. Sticky-price firms increased leverage more than flexible-price firms following the staggered implementation of the Interstate Banking and Branching Efficiency Act across states and over time, which we use in a difference-in-differences strategy. Firms' frequency of price adjustment did not change around the deregulation.
-
-
Copy CitationFrancesco D’Acunto, Ryan Liu, Carolin Pflueger, and Michael Weber, "Flexible Prices and Leverage," NBER Working Paper 23066 (2017), https://doi.org/10.3386/w23066.
-
Published Versions
Francesco D’Acunto & Ryan Liu & Carolin Pflueger & Michael Weber, 2018. "Flexible prices and leverage," Journal of Financial Economics, . citation courtesy of 
More from the NBER
In addition to working papers, the NBER disseminates affiliates’ latest findings through a range of free periodicals — the NBER Reporter, the NBER Digest, the Bulletin on Health, and the Bulletin on Entrepreneurship — as well as online conference reports, video lectures, and interviews.
