Sales efforts, capital structure and monopoly power

Abstract

Explains how sales efforts try to create product differentiation and increase monopoly power; and uses 1995‐1996 data from a panel of 45 Greek firms to examine the relationship between debt‐to‐equity ratio and profitability, taking a firm’s sales promotion expenses into account. Applies three mathematical models to the data and finds a significant negative relationship between debt‐to‐equity and profit margin, i.e. that the cost of borrowing capital exceeds the benefits of investment. Finds a significant positive relationship between sales promotion expenses and profit margin, which suggests that promotional activities do increase monopoly power. Briefly considers consistency with other research.

Citation

Ventoura‐Neokosmidi, Z. (2002), "Sales efforts, capital structure and monopoly power", Managerial Finance, Vol. 28 No. 5, pp. 55-58. https://doi.org/10.1108/03074350210767861