Market behavior and financial structure of firms

This dissertation investigates the strategic dimension of financial structure decisions of operating enterprises. Both the description of corporate strategic behavior on markets and the description of firms internal properties, such as financial structure, have been at the heart of an ever-growing stream of economic literature for several decades. However, for the most part of the contributions dealing with these two major components of the theory of the firm, the analytical coverage exhibits a conceptual separation which isolates the respective analysis of the focal aspect. The internal linkage connecting both elements has been discussed very sparsely. It, however, appears evident that only a connection between these two aspects allows for a certain progress in the understanding of these phenomena. The present dissertation shifts this connection into focus to investigate the antecedents that determine the choices made by firms regarding their financial structure. The analytical framework developed in this study includes and links up those influencing factors that proved to be driving forces behind the differing results obtained by major theoretical approaches developed since Modigliani/Miller (1958). By explicitly considering the phenomena which operating firms face (including circumstances prevalent on their output markets), this dissertation aims at contributing to overcome the aforementioned research gap concerning the internal linkage between the antecedents of financial structure choice and the output market conditions encountered by firms.