Financing decisions of firms: the roles of legal systems, shareholder rights and creditor rights
We examine how firms finance their investments, dividends, and profit shortfalls in different institutional environments. Using firm‐level data from 71 countries, we employ a dynamic multi‐equation system addressing the interdependence and intertemporal nature of financing decisions. We find that eq...
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| Veröffentlicht in: | Accounting and finance (Parkville) 2021-06, Vol.61 (2), p.2717-2757 |
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| container_title | Accounting and finance (Parkville) |
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| creator | Özer, Gökhan Çam, İlhan |
| description | We examine how firms finance their investments, dividends, and profit shortfalls in different institutional environments. Using firm‐level data from 71 countries, we employ a dynamic multi‐equation system addressing the interdependence and intertemporal nature of financing decisions. We find that equity and long‐term debt (short‐term debt and cash) play a major role in financing capital expenditures (working asset investment). As the institutional environment strengthens, (i) firms increase (decrease) their reliance on equity (debt) issuance in financing capital expenditures, (ii) firms decrease their leverage, and (iii) they extend their debt maturity. We further report several findings on the effects of financial development. |
| doi_str_mv | 10.1111/acfi.12681 |
| format | Article |
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| ispartof | Accounting and finance (Parkville), 2021-06, Vol.61 (2), p.2717-2757 |
| issn | 0810-5391 1467-629X |
| language | eng |
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| source | Wiley Journals; EBSCOhost Business Source Complete |
| subjects | Capital expenditures Creditor rights Debtor and creditor Financing decisions Legal systems Seemingly unrelated regression Shareholder rights Shareholders rights Stockholders Working capital |
| title | Financing decisions of firms: the roles of legal systems, shareholder rights and creditor rights |
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