CEVAP:

As products differ, the demand and supply mechanisms of each industry are unique. Therefore, the size and type of investments vary across industries which necessitate financing under different capital structures. The intensity of the industry-wide competition displays a significant effect on capital structure decisions since value maximization is straitened under heavy competition. Demand volatility may also alter financing decisions in favor of equity issues to balance out the business risk which may raise the WACC and deteriorate firm value.