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Firm Financing in the Euro Area: How asset risk affects capital structure decisions within the monetary union

Textbook 2014 167 Pages

Business economics - Investment and Finance

Summary

Using a sample of non-financial listed firms located in the Euro area, the determinants of capital structure decisions in the years 2000-2003 are investigated in this study. In line with the traditional theoretical approach and in contrast with traditional empirical literature, the study is based on a market-value measure of leverage, estimated with the Merton model. In a cross-section regressions some variables have similar effects on financing decisions across countries, while others may play a different role; risk, measured as the volatility of the market value of assets, is the best predictor of observed leverage ratios.<br>The integration of Euro-area financial markets varies significantly in different market segments: money and inter-bank markets are highly integrated, corporate bond and equity markets show a clear path of increasing integration, while retail banking markets are much less integrated. Tax and bankruptcy rules differ across the twelve countries, as well as the economic background. As a consequence, nationality is still an important determinant of observed debt ratios, despite the monetary union.

Details

Pages
167
Type of Edition
Erstausgabe
Year
2014
ISBN (eBook)
9783954898145
ISBN (Book)
9783954893140
File size
11.2 MB
Language
English
Catalog Number
v312770
Grade
Tags
firm financing euro area

Author

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Title: Firm Financing in the Euro Area: How asset risk affects capital structure decisions within the monetary union