The importance of alliances in firm capital structure decisions: evidence form biotechnology firms

Fabio Zambuto, Giovanna Lo Nigro, Jonathan P. O'Brien

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)

Abstract

Building on finance research, we argue that the ex post hazards arising from alliance formationdepend upon the firm’s financial condition. Financial distress jeopardizes the continuityof an alliance and the value of the investments involved. Thus, firms should reduce leverageto signal continued commitment and to induce investments from alliance partners. Accordingly,we find that a firm’s current alliance propensity predicts its subsequent capital structuredecisions and that this relationship is most pronounced in the presence of otherexchange hazards. Our paper contributes to alliance research and to the growing literaturediscussing the strategic consequences of capital structure.
Original languageEnglish
Number of pages16
JournalManagerial and Decision Economics
Publication statusPublished - 2017

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Strategy and Management
  • Management Science and Operations Research
  • Management of Technology and Innovation

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