Product Demand Characteristics , Brand Perception , and Financial Policy

@inproceedings{Larkin2010ProductDC,
  title={Product Demand Characteristics , Brand Perception , and Financial Policy},
  author={Yelena Larkin},
  year={2010}
}
We use a proprietary database of consumer brand evaluation to explore the role of firm-specific demand characteristics in financial decisions. We hypothesize that higher and more inelastic consumer demand for a product reduces the costs of financial distress but can also intensify agency conflicts by increasing firm market power. The empirical analysis shows that firms with stronger demand take on more debt and hold less cash, suggesting that financial distress risk is the primary channel… Expand

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