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NATIONAL BUREAU OF ECONOMIC RESEARCH

Ryan Liu

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NBER Working Papers and Publications

January 2017Flexible Prices and Leverage
with Francesco D’Acunto, Carolin Pflueger, Michael Weber: w23066
The frequency with which firms adjust output prices helps explain persistent differences in capital structure across firms. Unconditionally, the most flexible-price firms have a 19% higher long-term leverage ratio than the most sticky-price firms, controlling for known determinants of capital structure. Sticky-price firms increased leverage more than flexible-price firms following the staggered implementation of the Interstate Banking and Branching Efficiency Act across states and over time, which we use in a difference-in-differences strategy. Firms' frequency of price adjustment did not change around the deregulation.

Published: Francesco D’Acunto & Ryan Liu & Carolin Pflueger & Michael Weber, 2018. "Flexible prices and leverage," Journal of Financial Economics, .

 
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