European integration and corporate financing

Muradoğlu, Yaz Gűlnur; Onay, Ceylan; Phylaktis, Kate

doi:10.1016/j.irfa.2014.02.002

Cited by 7 publications

(5 citation statements)

References 93 publications

(114 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…When looking instead at firms based outside the Euro area, we still observe a decrease in the use of new external equity during the crisis, but the difference between the two periods is much less pronounced. Again, these findings are in line with those reported in Muradoǧlu et al (2014): when their country of incorporation joins the European Union, companies increase the use of external equity. Then, when they also adopt the European common currency, they experience an increase in debt capacity, and gradually increase their use of leverage.…”

Section: Analysis Of Capital Structure: Resultssupporting

confidence: 90%

“…This is true for firms incorporated both in the Euro area and outside it. However, Euro area firms seem to rely less on internal funds, more on debt and less on equity than firms based in countries not adopting the common currency, consistently with the findings of Muradoǧlu et al (2014).…”

Section: Analysis Of Capital Structure: Resultssupporting

confidence: 74%

“…They also display a similar speed of adjustment of their capital structure, and the factors that affect the target debt ratios of firms in Western Europe are also valid determinants for their counterparts in Eastern Europe. On the other hand, Muradoǧlu et al (2014) shows the importance of capital supply factors on firms' financing choices, by showing that firms increase equity financing when their country of residence joins the EU (thus allowing for an higher integration of the local equity market 1 ), while they increase debt financing (as well as both short and long-term borrowing) when their country adopts the Euro, an event likely to improve the credit channel. By analyzing firms incorporated in Eastern Europe, we are able to investigate if and how the financial turbulence generated in the US, during the global financial crisis, and in western Europe, during the European debt crisis, has propagated to the companies of countries that had only recently joined the European Union and, in some cases, the Euro, thus contributing to the firm-level literature on economic and financial integration.…”

Section: Literature Review and Research Hypothesesmentioning

confidence: 99%

See 2 more Smart Citations

Financial crises, debt overhang, and firm growth in transition economies

Botta

2020

Applied Economics

View full text Add to dashboard Cite

We examine the effects of the global financial crisis of 2008 and the European debt crisis of 2011 on the relationship between capital structure, investments, and performance for Eastern European companies. While the existing literature documents how firms' investments are sensitive to the availability of internal funds and to debt holdings, we further investigate whether this investment sensitivity also translates in different levels of performance, and document that capital structure indeed has both a direct and an indirect effect, mediated by the capital expenditure channel. We show that firms with higher financial flexibility experience higher investments and returns on capital. Over-levered firms instead suffer from a debt overhang condition, forcing them to curb investments, and consequently experiencing lower performance.Overall, we provide evidence on the importance of capital structure and financial flexibility on investments and performance, showing the real consequences of the debt overhang condition on firm value creation. Firms should therefore aim at maintaining adequate financial flexibility in order to be able to pursue future profitable investment opportunities, and avoid the under-investment problem arising from a debt overhang situation.

show abstract

Section: Analysis Of Capital Structure: Resultssupporting

confidence: 90%

Section: Analysis Of Capital Structure: Resultssupporting

confidence: 74%

Section: Literature Review and Research Hypothesesmentioning

confidence: 99%

See 1 more Smart Citation

Financial crises, debt overhang, and firm growth in transition economies

Botta

2020

Applied Economics

View full text Add to dashboard Cite

show abstract

“…Claessens et al (2002) concluded from a sample of 77 countries, on one hand, that foreign direct investment is a complement and not a substitute of domestic stock market development, and on the other hand, that foreign direct investment is positively related with stock market capitalization and value traded. Muradoglu et al (2013) showed that small firms benefited from the European integration process not only by equity channel but especially through FDI flows. In light of this it is important to evaluate both variables as determinants of financing choices.…”

Section: Financial Liberalization and Foreign Direct Investmentmentioning

confidence: 99%

The Impact of Institutional Environment in Firms' Capital Structure During the Recent Financial Crises

Alves

Francisco

2013

SSRN Journal

View full text Add to dashboard Cite

This paper reviews the impact of environmental variables on firms' capital structure throughout the recent financial crises (dot.com bubble, subprime crisis, and European sovereign debt crisis). For the first time, the sovereign general gross debt and current account balance appear in the debate, revealing evidence that the sovereign's irrational exuberance of debt has been mimicked by firms. The proposed approach revealed two important trends, broadly consistent throughout those disturbed episodes. Under stress firms firstly increase leverage and rely, or are forced to rely, secondly on short-term borrowings, heightening rollover risks. Altogether, the pronounced outbreak of those crises had on its own the seeds of a new one. Regarding the European sovereign debt crisis, the presence of an asymmetric shock was noticed, with the periphery and the centre of the European Union being targeted with different magnitudes. Lastly, it is clear that environmental variables are key to this topic and should deserve a more careful analysis to improve the understanding of financing choices of firms. Even more in a case of a financial crisis... JEL Classification: G01, G30, G32

show abstract

“…Modern trends in corporate finance management are associated with the globalization of the financial sphere and, as a consequence, the emergence of additional risks due to the increasing interdependence between the various structural elements of the financial market [6][7][8][9]. Therefore, there is a need to apply innovative methods of corporate finance management in order to promptly respond to changes in the external environment, while maintaining the focus of the company's development strategy [10][11][12][13].…”

Section: Introductionmentioning

confidence: 99%

Efficiency of corporate finance: formation of accounting and management tools

et al. 2021

View full text Add to dashboard Cite

The commercial sector of the economy is the guarantor of the stability of the state functioning, since the economic subjects employed in it are able to combine personal (entrepreneurial) interests with the interests of the population, thanks to their economic potential formed at the expense of business processes aimed at profit (the main source of financing measures to meet human needs for the existing benefits). The purpose of the study - the formation of accounting and management tools that allow corporations to conduct a comprehensive analysis of the effectiveness of financial relationships, taking into account all the conditions of activity inherent in big business. In the course of the study the calculative-constructive, deductive and inductive methods were used, which allow to interconnect dialectically resultant and factor efficiency indicators, in our case, in the sphere of corporate finance, through multiple-additive correlation of efficiency and cost of financial relations in big business. The article presents the system of indicators developed by the authors, offered to corporations for assessment by the accounting and management apparatus of efficiency of their financial relations, which play the key role in business due to the greatest liquidity of monetary resources. The toolkit of such a system is built on the study of controlled and uncontrolled conditions of corporations' functioning. The use by corporations of the recommended author's approach will provide them with the optimization of the result and costs (profit and expenses) and, accordingly, the effectiveness and cost effectiveness (direct and indirect profitability or profitability) of activities, by which their financial efficiency is determined.

show abstract

European integration and corporate financing

Cited by 7 publications

References 93 publications

Financial crises, debt overhang, and firm growth in transition economies

Financial crises, debt overhang, and firm growth in transition economies

The Impact of Institutional Environment in Firms' Capital Structure During the Recent Financial Crises

Efficiency of corporate finance: formation of accounting and management tools

Contact Info

Product

Resources

About