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DETERMINANTS OF THE CAPITAL STRUCTURE OF EUROPEAN FIRMS: THE MODERATING ROLE OF EFSF/ESM FINANCIAL ASSISTANCE PROGRAMS

International Journal of Banking and Finance, 2022-01, Vol.17 (1), p.81-108 [Peer Reviewed Journal]

2022. This work is published under https://creativecommons.org/licenses/by/4.0/ (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License. ;ISSN: 1675-722X ;ISSN: 2811-3799 ;EISSN: 2590-423X ;DOI: 10.32890/ijbf2022.17.1.4

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  • Title:
    DETERMINANTS OF THE CAPITAL STRUCTURE OF EUROPEAN FIRMS: THE MODERATING ROLE OF EFSF/ESM FINANCIAL ASSISTANCE PROGRAMS
  • Author: Chatzinas, Georgios ; Papadopoulos, Symeon
  • Subjects: Capital structure ; efsf/esm financial programs ; eurozone ; pecking order ; Tax rates ; trade-off
  • Is Part Of: International Journal of Banking and Finance, 2022-01, Vol.17 (1), p.81-108
  • Description: The present study has investigated the moderating effect of the European Financial Stability Facility (EFSF) / European Stability Mechanism (ESM) support to the firms’ indebtness. Using dynamic panel data, three models were estimated and aimed at the determination of the way that EFSF/ESM financial assistance programs could influence the impact of five firm-specific characteristics, namely growth, profitability, size, tangibility and non-debt tax shield on the capital structure of European firms. Data from 2,086 firms for the period 2003 – 2016 were used, and two dummy variables; one for the EFSF/ESM support period and one for any kind of economic crisis period were formed. The results indicated that pecking order prevailed over trade-off theory. Economic crises did not affect severely the firm-characteristics’ effects, but the EFSF/ESM programs influence appeared in three cases. During the period of EFSF/ESM assistance, profitability’s negative effect on long-term debt ratio disappeared and on total debt ratio strengthened, growth’s positive impact on total debt ratio diminished and non-debt tax shield acquired positive influence on total debt ratio. These changes might be explained by the increased levels of tax rates and decreased levels of uncertainty that the EFSF/ ESM programs caused, as well as by the reluctance of lenders to provide new funds.
  • Publisher: Kedah: Universiti Utara Malaysia
  • Language: English;Malay
  • Identifier: ISSN: 1675-722X
    ISSN: 2811-3799
    EISSN: 2590-423X
    DOI: 10.32890/ijbf2022.17.1.4
  • Source: ProQuest Central
    DOAJ Directory of Open Access Journals
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