Discussion paper

DP12151 Capital Structure Under Collusion

We study the financial leverage of firms that collude by forming a cartel. We find that cartel firms have lower leverage ratios during collusion periods, consistent with the idea that reductions in leverage help increase cartel stability. Cartel firms have a surprisingly large economic footprint (they represent more than 20% of the total market capitalization in the U.S.), so understanding their decisions is relevant. Our findings show that anti-competitive behavior has a significant effect on capital structure choices. They also shed new light on the relation between profitability and financial leverage.


Ormazabal, G, D Ferrés and P Povel (2017), ‘DP12151 Capital Structure Under Collusion‘, CEPR Discussion Paper No. 12151. CEPR Press, Paris & London. https://cepr.org/publications/dp12151