Abstract
I examine the effect of firms' restructuring announcements on the investment decisions of their rivals. I show that restructuring news that signal an improvement in the competitive position of UK manufacturing sites are associated with a 6% increase in local competitors' capital investment and I demonstrate that this effect is driven by the low debt competitors. Those findings are consistent with the hypothesis that firms react to the competitive threat from the announcing firm by adjusting their physical capital. Several robustness tests, including a placebo test, suggest our results are not driven by confounding factors.
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