Debt–performance relationship and firms' international trade activities

PurposeThis study examines the influence of firm's international trade activities on the relationship between debt and firm's performance.Design/methodology/approachThis study is based on a sample of 8,343 Portuguese manufacturing firms between 2010 and 2017 and resorts to a random effects model.FindingsResults suggest that international engagement can have a moderating effect on the relationship between debt and a company's performance. In fact, results indicate that the impact of debt on performance is less negative for companies involved in international trade activities (either importing, exporting or both) than for purely domestic firms. Furthermore, results also suggest that the level of international involvement is relevant; importing activities are those that contribute most toward a positive impact.Originality/valueThe work extends the existing literature by considering various types of international trade activities.