Capital structure under collusion

Daniel Ferrés, Gaizka Ormazabal, Paul Povel, Giorgo Sertsios

Research output: Contribution to journalArticlepeer-review

2 Scopus citations


We analyze the financial leverage of firms that collude to soften product market competition by forming a cartel. We find that cartel firms have lower leverage during collusion periods. This is consistent with the idea that cartel firms strategically reduce leverage to make their cartels more stable, because high leverage makes deviations from a cartel agreement more attractive. Given that cartels have a large economic footprint, their study is also relevant for the capital structure literature, which has largely ignored the role of anti-competitive behavior.

Original languageEnglish
Article number100854
JournalJournal of Financial Intermediation
StatePublished - Jan 2021

Bibliographical note

Funding Information:
Gaizka Ormazabal acknowledges funding from the Ramon y Cajal and Marie Curie Fellowships, the Spanish Ministry of Science and Innovation (grant ECO2015-63711-P), the Cátedra de Dirección de Instituciones Financieras y Gobierno Corporativo del Grupo Santander, and the BBVA Foundation (2016 grant “Ayudas a Investigadores, Innovadores, y Creadores Culturales”). Sertsios acknowledges financial support from the Centro de Gobierno Corporativo de la Pontificia Universidad Católica de Chile (CGCUC) and from Proyecto Fondecyt Regular #1190091. We thank Augusto Orellana for excellent research assistance. We thank Murillo Campello, Francesco D'Acunto, Mike Faulkender, Sandy Klasa, Steve McKeon, Vojislav Maksimovic, Will Mullins, Hernan Ortiz-Molina (discussant), Ana Elisa Pereira, Gordon Phillips, Francisco Urzúa, and Alminas Žaldokas for very helpful comments. We are also indebted to participants at the 2017 Midwest Finance Association meeting; and to seminar participants at Baylor University, University of Arizona, University of Houston, University of Maryland, Universidad Católica, and Universidad de Chile.

Publisher Copyright:
© 2020 Elsevier Inc.


  • Capital structure
  • Cartels
  • Collusion
  • Financial leverage

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