Outsourcing : the role of debt financing

Teixeira, João

http://hdl.handle.net/10400.3/4957

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Authors

Teixeira, João

Abstract(s)

This 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.

Keywords

Capital Structure Outsourcing

URI

http://hdl.handle.net/10400.3/4957

Citation

Teixeira, João C. A. (2011). Outsourcing: the role of debt financing, “Working Paper Series” nº 25/11, 26 pp.. Ponta Delgada: Universidade dos Açores, CEEAplA-A.