CEEAplA Working Paper Series 2011
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Browsing CEEAplA Working Paper Series 2011 by Subject "Capital Structure"
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- Outsourcing : the role of debt financingPublication . Teixeira, JoãoThis paper investigates the effect of capital structure on a firm’s choice between vertical integration and outsourcing. Suppliers use debt as a strategic instrument to collect the surplus from outsourcing, and their wealth constraint or limited liability ensures them more attractive compensation schemes. Investigating the buyer’s capital structure, we find that outsourcing with risky debt is more likely to occur for high values of the outsourcing surplus.