Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/314204 
Authors: 
Year of Publication: 
2022
Citation: 
[Journal:] Journal of Applied Economics [ISSN:] 1667-6726 [Volume:] 25 [Issue:] 1 [Year:] 2022 [Pages:] 1219-1238
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
This paper examines whether financial constraints of firms influence their pricing behavior. To do so, a product-level dataset is used from Iranian-listed manufacturing companies. This study employs the imposition of international sanctions against Iran in 2012 as an exogenous shock to identify the effect of financial constraints. According to the results financially restricted firms keep their prices lower than their counterparts to increase their internal financial resources. The results show the difference between output prices of constrained and unconstrained firms rising after the imposition of sanctions. In addition, this relationship is affected by the degree of export-orientation of firms, and only exporter firms that experienced the negative demand shock after the sanctions, set their price lower to reduce the financial pressures. Also, the degree of dependency on imported input does not play a significant role in the relationship and ownership structure of firms has a significant impact on the relationship.
Subjects: 
exports
financial constraints
ownership structure
Price changes
sanctions
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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