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Asset specificity, firm heterogeneity and capital structure

Article Abstract:

The relationship between capital structure and firm strategy is studied. An examination of 295 firms across 30 industrial sectors confirms that investment in firm-specific assets has a far greater influence on capital structure than do intra- or inter-industry structural characteristics. Such assets, which are often intangible and difficult to redeploy, constrain a firm's ability to assume debtsince they are not usually accepted as collateral. Thus, a firm's management ofits borrowings becomes a crucial factor in determining its strategy, which is dependent on the ability of the firm to invest in the assets and skills needed to ensure competitiveness. As such, the presence of firm-specific effects in the sample of firms provides empirical proof that capital structure is linked to strategy, and, in turn, to the assets and skills needed to achieve strategicgoals.

Capital stock

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Specificity and opacity as resource-based determinants of capital structure: evidence for Spanish manufacturing firms

Article Abstract:

Issues discussed concern the impact of strategic investments on a corporation's financial policy, focusing on strategic resources in Spanish manufacturing firms. The resource-based conception of the firm is discussed, which posits that an understanding of corporate strategy and performance are enhanced by exploring the distinctive factors that make up a firm's resources.

Management, Manufacturing industry, Manufacturing industries, Spain, Capital investments

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The choice of entry mode in sequential foreign direct investment

Article Abstract:

This article presents a model of a business' foreign investment strategy, focusing on the choice of entry mode into the foreign market. The model studies the sequence of investments into the US' chemical and electronics industries from 1975-1992 by European and Japanese investors.

Financial management, World, Models, Foreign investments, Investments, International business enterprises, Multinational corporations

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