Premium
Survival of the Fittest or the Fattest? Exit and Financing in the Trucking Industry
Author(s) -
Zingales Luigi
Publication year - 1998
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/0022-1082.00039
Subject(s) - deregulation , motor carrier , trucking industry , survival of the fittest , leverage (statistics) , business , debt , capital market imperfections , economics , monetary economics , finance , capital market , market economy , engineering , truck , evolutionary biology , machine learning , computer science , biology , aerospace engineering
This paper studies the impact that capital market imperfections have on the natural selection of the most efficient firms by estimating the effect of the prederegulation level of leverage on the survival of trucking firms after the Carter deregulation. Highly leveraged carriers are less likely to survive the deregulation shock, even after controlling for various measures of efficiency. This effect is stronger in the imperfectly competitive segment of the motor carrier industry. High debt seems to affect survival by curtailing investments and reducing the price per ton‐mile that a carrier can afford to charge after deregulation.