Leverage and Information Asymmetry in Product Markets. The Impact on Firm Survival and Security Returns

      Аннотация: The link between security returns and product market interactions has become an important area of research in recent years. Understanding this link requires how industry structure as well as firm-specific characteristics affect firm behavior such as investment and divestment decisions. A crucial aspect of this dynamic is how well-informed firms are regarding competitors in the industry. Thus, this book develops a real options model of imperfect competition with asymmetric information that analyzes firms’ exit decisions. Optimal exit decisions are linked to firms’ financial leverage and efficiency. The model sheds light on how information asymmetry may distort product market competition and how firm behavior reveals information to competitors. The book also analyzes firm risk and derives implications for security returns. It argues that firm risk is not only driven by a firm’s own characteristics but is also affected by the competitor firm characteristics and behavior. The book is intended for researchers and professionals who are interested in the interaction between corporate finance on the one hand and industrial organization and product market competition on the other hand.

Ключевые слова: Asymmetric Information, capital structure, efficiency, Real Options, Firm Survival, Stock Returns, Firm Risk, Product Market Competition