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Corporate Balance Sheet Adjustment: Stylized Facts, Causes and Consequences

Jahrbuch für Wirtschaftswissenschaften, 2013-01, Vol.64 (2), p.117-137 [Peer Reviewed Journal]

2013, Lucius & Lucius Verlagsges. mbH ;Copyright Lucius & Lucius Verlagsgesellschaft mbH 2013 ;ISSN: 0948-5139 ;EISSN: 2366-035X ;DOI: 10.1515/roe-2013-0202

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Title:
Corporate Balance Sheet Adjustment: Stylized Facts, Causes and Consequences
Author: Ruscher, Eric ; Wolff, Guntram B.
Subjects: Balance sheets ; Bankruptcy ; Business cycles ; capacity ; capital ; Comparative analysis ; consumption ; Corporate debt ; Corporate finance ; Corporate investments ; Corporate liquidity ; Corporations ; Cost control ; Econometrics ; Economic crisis ; Equity ; Eurozone ; Financial analysis ; Financial investments ; Financial leverage ; Fiscal policy ; GDP ; Germany ; Gross Domestic Product ; International comparisons ; International finance ; Investment ; Japan ; Liquidity ; Macroeconomics ; saving ; Sovereign debt ; wealth
Is Part Of: Jahrbuch für Wirtschaftswissenschaften, 2013-01, Vol.64 (2), p.117-137
Description: Using national account data, we define corporate balance sheet adjustment episodes as periods during which major increases in non-financial corporations' net lending/borrowing are experienced. An analysis of such episodes in Germany and Japan, and a more systematic exploration of a sample of 30 countries, show that corporate balance sheet adjustment tends to be long lasting and associated with significant effects on current accounts, wages and investment. Adjustment episodes lead to significant changes in corporate balance sheets ratios with a build-up of liquidity and a reduction of leverage. The adjustment is generally achieved by reducing investment and increasing savings on the back of a falling wage share. A panel econometric exercise shows that balance sheet adjustment periods are triggered by macroeconomic downturns as well as balance sheet stress due to high debt, low liquidity and negative equity price shocks.
Publisher: Berlin: Lucius & Lucius Verlagsges. mbH
Language: English
Identifier: ISSN: 0948-5139
EISSN: 2366-035X
DOI: 10.1515/roe-2013-0202
Source: ProQuest Central

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Corporate Balance Sheet Adjustment: Stylized Facts, Causes and Consequences

2013, Lucius & Lucius Verlagsges. mbH ;Copyright Lucius & Lucius Verlagsgesellschaft mbH 2013 ;ISSN: 0948-5139 ;EISSN: 2366-035X ;DOI: 10.1515/roe-2013-0202

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