Survival of the Fittest or the Fattest? Exit and Financing in the Trucking Industry

Survival of the Fittest or the Fattest? Exit and Financing in the Trucking Industry

This paper studies the impact that capital market imperfections have on the natural selection of the most efficient firms by estimating the effect of the prederegulation level of leverage on the survival of trucking firms after the Carter deregulation. Highly leveraged carriers are less likely to su...

Full description

Saved in:
Bibliographic Details
Published in:The Journal of finance (New York) Vol. 53; no. 3; pp. 905 - 938
Main Author: Zingales, Luigi
Format: Journal Article
Language:English
Published: Boston, USA and Oxford, UK Blackwell Publishers Inc 01-06-1998
Blackwell Publishers, Inc
Subjects:
Bulk carriers
Capital markets
Capital structure
Common carriers
Debt
Deregulation
Economic models
Efficiency
Financial investments
Financial leverage
Freight
Labor costs
Shipments
Statistical analysis
Studies
Trucking industry
United States > US
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This paper studies the impact that capital market imperfections have on the natural selection of the most efficient firms by estimating the effect of the prederegulation level of leverage on the survival of trucking firms after the Carter deregulation. Highly leveraged carriers are less likely to survive the deregulation shock, even after controlling for various measures of efficiency. This effect is stronger in the imperfectly competitive segment of the motor carrier industry. High debt seems to affect survival by curtailing investments and reducing the price per tonmile that a carrier can afford to charge after deregulation.
Bibliography:ArticleID:JOFI039
istex:8FE88DC3BEE914D757BB54544B90516866558443
ark:/67375/WNG-7HL7CG9K-W
Graduate School of Business, University of Chicago. I wish to thank Abhay Pande for interesting me in the trucking industry, and Judy Chevalier, Kent Daniel, Colin Mayer, Antonio Merlo, Marzio Galeotti, Austan Goolsbee, Charlie Himmelberg, Vojislav Maksimovic, Steve Kaplan, Anil Kashyap, Sam Peltzman, Raghu Rajan, Fabio Schiantarelli, Per Stromberg, Sheridan Titman, Rob Vishny, an anonymous referee, René Stulz (the editor), and participants at seminars at a CEPR conference on “International Perspectives on the Macroeconomic and Microeconomic Implications of Financing Constraints,” in Bergamo, the University of Chicago, the London Business School, the NBER, the WFA meetings, and the AEA meetings for useful comments. Andy Pruitt provided excellent research assistance. Research expenses have been supported by the Center for the Study of the Economy and the State. The author also acknowledges financial support from the Center for Research in Security Prices and NSF grant #SBR‐9423645.
ISSN:0022-1082
1540-6261
DOI:10.1111/0022-1082.00039