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Buyer-supplier relationships and the stakeholder theory of capital structure

Research output: Contribution to journalJournal article

Published

<mark>Journal publication date</mark>10/2008
<mark>Journal</mark>Journal of Finance
Issue5
Volume63
Number of pages46
Pages2507-2552
Early online date10/09/08
<mark>Original language</mark>English

Abstract

Firms in bilateral relationships are likely to produce or procure unique products—especially when they are in durable goods industries. Consistent with the arguments of Titman and Titman and Wessels, such firms are likely to maintain lower leverage. We compile a database of firms' principal customers (those that account for at least 10% of sales or are otherwise considered important for business) from the Business Information File of Compustat and find results consistent with the predictions of this theory.