Outside Purchase Contracts, Human Capital and Firm Capital Structure / S. Katie Moon, Gordon M. Phillips.

Format:

Book

Author/Creator:

Moon, S. Katie.

Contributor:

National Bureau of Economic Research.

Phillips, Gordon M.

Series:

Working Paper Series (National Bureau of Economic Research) no. w20579.

NBER working paper series no. w20579

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

We examine the impact of outside purchase contracts on firm risk and firm capital structure. We find that firms with more outside purchase contracts have less risky cash flows. Despite these less risky cash flows, firms with these contracts also have less financial leverage especially when they operate in high value-added industries. Examining firm financing decisions, we document that firms with more outside contracts are more likely to issue private securities. Our results are consistent with firms with more outside purchase contracts using less leverage to decrease the expected costs of financial distress on their explicit and implicit contracting parties.

Notes:

Print version record

October 2014.