The interaction between capital structure and product market competition: Empirical evidence from Chinese listed companies

摘要

The relationship between capital structure and product market competition is a field got much concern from economic scholars recently, but research works got so far seem to neglect their bidirectional relationship. Considering this deficiency, I take Chinese A-stock listed companies as research objects, and use a systemic equation model to test the bidirectional relationship between companies' capital structure and their product market competition intensity. The test results indicate that both debt ratio and product market competition intensity have statistically significant negative effects on each other.