Entry and capital structure mimicking in concentrated markets: The role of incumbents’ financial disclosures

Bernard D, Kaya D, Wertz J (2021)

Publication Type: Journal article

Publication year: 2021

Journal

Journal of Accounting & Economics Elsevier

Book Volume: 71

Article Number: 101379

Journal Issue: 2-3

DOI: 10.1016/j.jacceco.2020.101379

Abstract

We examine whether the public availability of product market incumbents' financial disclosures leads to greater capital structure mimicking of incumbents by entrants. Exploiting a change in disclosure enforcement for German private firms in the mid-2000s, we find entrant-incumbent mimicking rises substantially in concentrated markets once incumbents' financial statements are publicly available. Additional tests exploring potential mechanisms are more consistent with interfirm learning underlying the effect than alternative channels. Our findings shed light on the effects of competitor financial statement disclosure on private firms’ initial financing decisions and highlight how capital structure dependencies among peer firms arise.

Authors with CRIS profile

Devrimi Kaya

Involved external institutions

Ruhr-Universität Bochum (RUB) DE Germany (DE) University of Washington US United States (USA) (US)

How to cite

APA:

Bernard, D., Kaya, D., & Wertz, J. (2021). Entry and capital structure mimicking in concentrated markets: The role of incumbents’ financial disclosures. Journal of Accounting & Economics, 71(2-3). https://doi.org/10.1016/j.jacceco.2020.101379

MLA:

Bernard, Darren, Devrimi Kaya, and John Wertz. "Entry and capital structure mimicking in concentrated markets: The role of incumbents’ financial disclosures." Journal of Accounting & Economics 71.2-3 (2021).

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