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Firm Complexity and Capital Structure: Evidence from Italian Diversified Firms

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  • Daniele Monteforte
  • Raffaele Staglianò

Abstract

This paper examines the links between product diversification, international diversification and capital structure for a panel of medium and large Italian firms. The results indicate that the interaction between these two dimensions of diversification strategy has a negative and significant impact on leverage. Furthermore, debt maturity analysis reveals that firms pursuing a simultaneous dual diversification strategy have, in particular, lower long‐term debt ratios. Our findings support the hypothesis that the complexity that comes from diversification reduces debt levels. Copyright © 2014 John Wiley & Sons, Ltd.

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  • Daniele Monteforte & Raffaele Staglianò, 2015. "Firm Complexity and Capital Structure: Evidence from Italian Diversified Firms," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 36(4), pages 205-220, June.
    • Handle: RePEc:wly:mgtdec:v:36:y:2015:i:4:p:205-220
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    Cited by:

    1. Jouida, Sameh & Hellara, Slaheddine, 2018. "Diversification and target leverage of financial institutions," Journal of Multinational Financial Management, Elsevier, vol. 46(C), pages 11-35.
    2. Vasanthan Subramaniam & Mosharrof Hosen, 2023. "Corporate diversification and debt financing: Do family shareholders protect their control rights?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 1305-1317, March.

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