Frésard, Laurent; Valta, Philip (2016). How Does Corporate Investment Respond to Increased Entry Threat? Review of Corporate Finance Studies, 5(1), pp. 1-35. Oxford University Press 10.1093/rcfs/cfv015
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We study how product-market interactions affect investment. We use reductions of import tariffs to examine how incumbents modify investment when the threat of rivals’ entry intensifies. Incumbents reduce investment by 7.2% in response to higher entry threat. Consistent with a strategic behavior, the investment reduction varies across market structures: it concentrates in markets in which competitive actions are strategic substitutes, where deterring entry is costly and investment makes incumbents look soft. Our results provide novel evidence on how and why firms’ interactions influence corporate investment.
Item Type: |
Journal Article (Original Article) |
|---|---|
Division/Institute: |
03 Faculty of Business, Economics and Social Sciences > Department of Business Management > Institute of Financial Management |
UniBE Contributor: |
Valta, Philip |
Subjects: |
300 Social sciences, sociology & anthropology > 330 Economics |
ISSN: |
2046-9136 |
Publisher: |
Oxford University Press |
Language: |
English |
Submitter: |
Karin Dolder |
Date Deposited: |
17 Aug 2016 16:00 |
Last Modified: |
05 Dec 2022 14:57 |
Publisher DOI: |
10.1093/rcfs/cfv015 |
BORIS DOI: |
10.7892/boris.85662 |
URI: |
https://boris.unibe.ch/id/eprint/85662 |
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