Global Journal of Management and Business Research, B: Economics and Commerce, Volume 22 Issue 4

event of unforeseeable events, financial crises or a liquidity crunch. Banks have a financing advantage over firms in other industries from the perspective of having unparalleled access to lenders (savers) that are in a weaker bargaining position and to statutory lenders (the central bank) that would not renege on their promise or disappoint in times of adversity. The power of lenders to advance loans or impose a higher cost of debt tends to be influenced by the disclosure practices of firms. Sengupta (1998) furnishes indication that firms that have the privilege of great disclosure quality ratings coming from financial analysts benefit from a lower effective interest cost of issuing debt. This observation is in line with the debate that a policy of timely and detailed disclosures diminishes lenders' perception of the risk of default for the disclosing firm, decreasing its cost of debt. Broberg, Tagesson & Collin (2010) found that size, and the debt ratio are favorably related to the depth and breadth of material voluntary disclosures. Given that Industry characteristics significantly influence voluntary disclosures (Broberg, Tagesson, & Collin, 2010); the inclination for firms in industries with a more extensive intensity of concentration to make less disclosure and circumvent certain financing choices that have significant disclosure consequences (Ali, Klasa, & Yeung,2014); and the variability of the power of lenders in consonance with disclosure practices (Sengupta,1998; Tagesson & Collin, 2010), then I would argue that the power of lenders must exhibit a dependency on and is at variance with industry characteristics. V. C onclusions In this essay, I provided additional theoretical grounding for porter’s five-forces framework. I specified the elements that make the model incomplete and provided a theoretical justification for the incorporation of these elements. In the final analysis, I propose that the attractiveness of an industry could be more exhaustively explained by extending the five-forces framework into the seven-structure paradigm. The chief implication of this extended model is that firm managers’ attempt to formulate effective competitive strategies must not only consider ways of dealing with the bargaining power of buyers, the bargaining power of suppliers, the threat of entry, industry rivalry, and the threat of substitutes but must also account for the feasible industry optimal structure of the capital with which those strategies must be implemented and the power of lenders in setting constraints on the utilization of the firms capital R eferences R éférences R eferencias The Determinants of the Attractiveness of an Industry: An Extension of The Porter’s Five-Forces Framework Global Journal of Management and Business Research Volume XXII Issue IV Version I Year 2022 ( ) B © 2022 Global Journals Many finance authors assert that the cost of debt is lower than the cost of equity (for example Modigliani & Miller,1958). Therefore, a firm is likely to be more profitable, the higher the level of debt that is incorporated into its capital structure, all other factors held constant. As a result, a firm that can mitigate the power of lenders, by way of raising debt capital at a cheaper cost, stands a chance of enhancing its profitability. The ability of commercial banks to attract cheaper financing from deposit providers is fundamental to their profitability. Trujillo-Ponce, (2010) demonstrated, by the application of the GMM-SYS estimator to an extensive sample of banks in Spain, that the relatively substantial profitability of Spanish banks for the period studied was related to a significant fraction of deposits of customers, among other factors. Although Al-Harbi (2019) reported that deposits contributed negatively to the profitability of banks, this should be understood from the perspective of the interest rates paid on bank deposits, such that a rise in interest rates on bank deposits will result in a lowering of banks’ profits. Some large retailers develop cheap sources of debt by relying on supplier credit. For instance, Walmart, a retail behemoth in the United States, employs four-times more financing from suppliers than short-term debt (Liberman, 2014). 1. Abor, J. (2005). The effect of capital structure on profitability: an empirical analysis of listed firms in Ghana. The journal of risk finance. 2. Adeyemi, S. B., & Oboh, C. S. (2011). Perceived relationship between corporate capital structure and firm value in Nigeria. University of Lagos Research Repository. [Available at: https://ir.unilag.edu.ng/handle/123456789/3082 ] 3. Al-Harbi, A. (2019), "The determinants of conventional banks profitability in developing and underdeveloped OIC countries", Journal of Economics, Finance and Administrative Science, Vol. 24 No. 47, 4-28. https://doi.org/10.1108/JEFAS- 05-2018-0043 4. Ali, A., Klasa, S., & Yeung, E. (2014). Industry concentration and corporate disclosure policy. Journal of Accounting and Economics, 58(2-3), 240- 264. 5. Amato, L. H., & Amato, C. H. (2009). Changing retail power and performance in distribution channels. International Journal of Retail & Distribution Management. 6. Andrews, P. W. S., (1949) Manufacturing Business, Macmillan, London. 7. Bain, J. S. (1949). A Note on Pricing in Monopoly and Oligopoly. American Economic Review, 39, 448-464 8. Bancel, F., & Mittoo, U. R. (2004). Cross-country determinants of capital structure choice: a survey of European firms. Financial management, 103-132. 9. Bedre-Defolie, O. and Biglaiser, G. (2017) Contracts as a Barrier to Entry in Markets with Nonpivotal 90