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The Effect of Leverage on Bargaining with a Corporation

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  • Sarig, Oded H

Abstract

This paper shows that the choice of a capital structure by a firm affects the bargaining posture of its shareholders vis-a-vis its suppliers of specialized production factors. The pricing of the firm's securities and the choice of a capital structure are analyzed in light of this effect of debt financing. Copyright 1998 by MIT Press.

Suggested Citation

  • Sarig, Oded H, 1998. "The Effect of Leverage on Bargaining with a Corporation," The Financial Review, Eastern Finance Association, vol. 33(1), pages 1-16, February.
    • Handle: RePEc:bla:finrev:v:33:y:1998:i:1:p:1-16
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    Cited by:

    1. Koskela, E. & Stenbacka, R., 2000. "Capital Structure, Wage Bargaining and Employment," University of Helsinki, Department of Economics 475, Department of Economics.
    2. Erkki Koskela & Rune Stenbacka, 2004. "Profit Sharing and Unemployment: An Approach with Bargaining and Efficiency-Wage Effects," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 160(3), pages 477-497, September.
    3. Vasiliou, Dimitrios & Daskalakis, Nikolaos, 2009. "Institutional characteristics and capital structure: A cross-national comparison," Global Finance Journal, Elsevier, vol. 19(3), pages 286-306.
    4. David A. Matsa, 2018. "Capital Structure and a Firm’s Workforce," NBER Working Papers 25125, National Bureau of Economic Research, Inc.
    5. Marian Rizov, 2008. "Corporate Capital Structure And How Soft Budget Constraints May Affect It," Journal of Economic Surveys, Wiley Blackwell, vol. 22(4), pages 648-684, September.
    6. Zhenxu Tong, 2015. "Labor Unions and Forms of Corporate Liquidity," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 42(7-8), pages 1007-1039, September.
    7. Koskela, Erkki & Stenbacka, Rune, 2003. "Profit Sharing and Unemployment: An Approach with Bargaining and Efficiency Wage Economics," Discussion Papers 863, The Research Institute of the Finnish Economy.
    8. Woods, Keegan & Tan, Kelvin Jui Keng & Faff, Robert, 2019. "Labor unions and corporate financial leverage: The bargaining device versus crowding-out hypotheses," Journal of Financial Intermediation, Elsevier, vol. 37(C), pages 28-44.
    9. Schmalz, Martin, 2018. "Unionization, Cash, and Leverage," CEPR Discussion Papers 12595, C.E.P.R. Discussion Papers.
    10. Jing Chen, 2005. "Imperfect Market or Imperfect Theory: A Unified Analytical Theory of Production and Capital Structure of Firms," Finance 0509009, University Library of Munich, Germany.
    11. Istaitieh, Abdulaziz & Rodriguez-Fernandez, Jose M., 2006. "Factor-product markets and firm's capital structure: A literature review," Review of Financial Economics, Elsevier, vol. 15(1), pages 49-75.
    12. T. Franck & N. Huyghebaert, 2004. "On the Interactions between Capital Structure and Product Markets.A Survey of the Literature," Review of Business and Economic Literature, KU Leuven, Faculty of Economics and Business (FEB), Review of Business and Economic Literature, vol. 0(4), pages 727-787.
    13. Abdulaziz Istaitieh & José M. Rodríguez‐Fernández, 2006. "Factor‐product markets and firm's capital structure: A literature review," Review of Financial Economics, John Wiley & Sons, vol. 15(1), pages 49-75.
    14. Isabel Marques & Zélia Serrasqueiro & Fernanda Nogueira, 2021. "Managers’ Competences in Private Hospitals for Investment Decisions during the COVID-19 Pandemic," Sustainability, MDPI, vol. 13(4), pages 1-14, February.
    15. Arturo, Ramirez Verdugo, 2004. "Dividend Signaling and Unions," MPRA Paper 2273, University Library of Munich, Germany, revised 04 Oct 2006.

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