Asset Specificity and Corporate Governance: An Empirical Test
Abstract
This study develops a model for estimating an index measure of asset specificity based on the liquidation value of corporate firms and the proportional distribution of their pre‐liquidation assets. A statistically significant positive relationship was found to exist between the estimated specificity index and financial leverage supporting the theoretical prediction. Additional evidence was found that firms with higher variability in sales, lower probabilities of failure, higher valued non‐debt tax shields and higher levels of financial slack use less financial leverage.
Citation
Cushing, W.W. and McCarty, D.E. (1996), "Asset Specificity and Corporate Governance: An Empirical Test", Managerial Finance, Vol. 22 No. 2, pp. 16-28. https://doi.org/10.1108/eb018546
Publisher
:MCB UP Ltd
Copyright © 1996, MCB UP Limited