The effect of product market strategies on the financial and ownership structures of firms

摘要

Purpose - The purpose of this paper is to test whether product market strategies have any effect onrnmanagerial shareholdings, leverage usage and firm diversification.rnDesign/methodology/approach - The paper focuses on a sample of US manufacturing firms andrndefines variables to proxy for product quality, ownership, financing and diversification. Regressionsrnwere run to test hypotheses.rnFindings - A positive relation was found between product quality and managerial ownership and arnnegative relation between product quality and use of leverage. Also, controlling for firm size, it wasrnfound that firm focus is concave in managerial shareholdings.rnResearch limitations/implications - Although the paper provides a path towards understandingrnintra-industry variations in corporate capital structures, it is recognized that additional research onrnsuch variations is warranted.rnPractical implications - The paper provides an explanation for the evidence that all-equity firmsrnare distinguished by large management shareholdings. In fact, one such firm, Microsoft Corporation,rnprovides one of the best examples of the paper's argument on why concentrated managerialrnshareholdings and financial slack facilitate an aggressive approach to protect a firm's margins.rnOriginality/value - This paper contributes to the literature, which relates product marketrncompetition to corporate capital structure and uses a different regression model than used in priorrnresearch. Specifically, the quasi-likelihood approach for fractional variables was used. Ownershiprnvariables are fractional variables that are not censored or logistic normally distributed, as presumedrnin some prior literature.