Southville International School and Colleges
Normal view MARC view ISBD view

Threat of entry and debt maturity: Evidence from airlines/ by Parise, Gianpaolo

Type: materialTypeLabelBookSeries: Journal of Financial Economics 127 (2). Publisher: Amsterdam Elsevier February 2018Description: Pages 226-247.ISSN: 0304-405X.Subject(s): Competition | Debt maturity | Rollover risk | Threat of entry
    average rating: 0.0 (0 votes)
Item type Location Call number Status Date due Barcode
Periodicals Periodicals
College Library

College Library

Periodical Section

I explore the effect of the threat posed by low-cost competitors on debt structure in the airline industry. I use the route network expansion of low-cost airlines to identify routes where the probability of future entry increases dramatically. I find that when a large portion of their market is threatened, incumbents significantly increase debt maturity before entry occurs. Overall, the main findings suggest that airlines respond to entry threats trading off the benefits of short-term financing for lower rollover risk. The results are consistent with models in which firms set their optimal debt structure in the presence of costly rollover failure.

There are no comments for this item.

Log in to your account to post a comment.
Powered by Koha