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Financial structure of firms in oligopoly evidence from Korea

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  • Financial structure of firms in oligopoly evidence from Korea
  • Cheong, Kiwoong; Lee, Sanghack
  • The Korean Economic Association


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Title Financial structure of firms in oligopoly evidence from Korea
Similar Titles
Material Type Articles
Author(English)

Cheong, Kiwoong; Lee, Sanghack

Publisher

[Seoul]:The Korean Economic Association

Date 1999
Journal Title; Vol./Issue The Korean Economic Review:vol. 15(no. 2)
Pages 12
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic Conditions
Holding The Korean Economic Association

Abstract

This paper examines the effect of the product market structure on firms' financial structure. Following Brander and Lewis (1986), several recent papers show that a firm can use leverage to favorably improve its position in the product market. The present paper constructs the model that exhibits the linkage between the product market structure and financial structure of firms. The model is tested empirically using data taken from Korean firms. The empirical test finds that, contrary to theoretical predictions, debt levels of Korean firms are negatively correlated to market concentration. Combined with the test result of Cheon and Lee (1999), this result indicates that the Brander-Lewis hypothesis does not hold in Korea.