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Firm Complexity and Capital Structure: Evidence from Italian Diversified Firms
Author(s) -
Monteforte Daniele,
Staglianò Raffaele
Publication year - 2015
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.2660
Subject(s) - diversification (marketing strategy) , capital structure , leverage (statistics) , debt , monetary economics , business , panel data , economics , financial economics , finance , econometrics , marketing , machine learning , computer science
This paper examines the links between product diversification, international diversification and capital structure for a panel of medium and large Italian firms. The results indicate that the interaction between these two dimensions of diversification strategy has a negative and significant impact on leverage. Furthermore, debt maturity analysis reveals that firms pursuing a simultaneous dual diversification strategy have, in particular, lower long‐term debt ratios. Our findings support the hypothesis that the complexity that comes from diversification reduces debt levels. Copyright © 2014 John Wiley & Sons, Ltd.