Research / BFI Working PaperJan 01, 2017

Flexible Prices and Leverage

Francesco D'Acunto, Ryan Liu, Carolin Pflueger

The frequency with which firms adjust output prices helps explain persistent differences in capital structure across firms. Unconditionally, the most flexible-price firms have a 19% higher long-term leverage ratio than the most sticky-price firms, controlling for known determinants of capital structure. Sticky-price firms increased leverage more than flexible-price firms following the staggered implementation of the Interstate Banking and Branching Efficiency Act across states and over time, which we use in a difference-in-differences strategy. Firms’ frequency of price adjustment did not change around the deregulation.

More Research From These Scholars

BFI Working Paper Nov 1, 2016

Monetary Policy and the Stock Market: Time-Series Evidence

Michael Weber, Andreas Neuhierl
Topics:  Financial Markets, Technology & Innovation, Fiscal Studies
BFI Working Paper Mar 25, 2021

The Effect of Macroeconomic Uncertainty on Household Spending

Olivier Coibion, Dimitris Georgarakos, Yuriy Gorodnichenko, Geoff Kenny, Michael Weber
Topics:  Uncategorized
BFI Working Paper Sep 10, 2019

IQ, Expectations, and Choice

Francesco D'Acunto, Daniel Hoang, Maritta Paloviita, Michael Weber
Topics:  K-12 Education, Monetary Policy, Financial Markets, Higher Education & Workforce Training