TY  - JOUR
AU  - MacKay,Peter
AU  - Phillips,Gordon M.
TI  - Is There an Optimal Industry Financial Structure?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9032
PY  - 2002
Y2  - June 2002
UR  - http://www.nber.org/papers/w9032
L1  - http://www.nber.org/papers/w9032.pdf
N1  - Author contact info:
Gordon M. Phillips
Marshall School of Business
University of Southern California
Citigroup Center
Los Angeles, CA 90089
Tel: 213/740-0038
E-Mail: Gordon.Phillips@marshall.usc.edu
AB  - We examine how intra-industry variation in financial structure relates to industry factors and whether real and financial decisions are jointly determined within competitive industries. We find that industry and group factors beyond standard industry fixed effects are also important to firm financial structure. Firm financial leverage, capital intensity, and cash-flow risk are interdependent decisions that depend on the firm's proximity to the median industry capital-labor ratio, the actions of firms within its industry quintile, and its status as entrant, incumbent, or exiting firm. Our results support competitive industry equilibrium models of financial structure in which debt, technology, and risk are simultaneous decisions.
ER  -