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THE INFLUENCE OF ADVERTISING EXPENSES AND BRAND VALUE ON CAPITAL STRUCTURE

...... The research further explains that there are two characteristics of the relationship between the level f a companys debt and the companys dealings as it pertains to input and output markets (Kale & Shahru, 2006). Kale & Shahru, (2006) base their research on the hypothesis. The first of which asserts that a company has the capacity to utilize a lower level of debt in its capital structure to persuade both suppliers and customers to accept relationship-specific investments (Kale & Shahru, 2006)
The researchers explain that the premise of this hypothesis can be found in studies conducted by Titman (1984) and Maksimovic and Titman (1991). In the work conducted by Titman (1984) it is asserted that a company that presents a unique product may necessitate that customers undertake investments that decrease in value if the company is forced to liquidate (Kale & Shahru, 2006). In this type of environment, lower leverage ensures that the company will have a liquidation policy that considers the outcome on its customers. Additioally, customers may not be enthusiastic about having a relationship with a company that is highly levered, which is also less likely to be concerned about its status (Maksimovic and Titman, 1991; Kale