The Euro and Corporate Financing
IMD International; European Corporate Governance Institute (ECGI); Yale University - International Center for Finance
Boston University - School of Management; Centre for Economic Policy Research (CEPR)
University of Colorado at Boulder - Leeds School of Business
January 25, 2011
Boston U. School of Management Research Paper Series No. 2011-1
In this paper we study how the introduction of the euro has affected corporate financing in Europe. We use firm level data from eleven euro-countries as well as from a control group of five other European countries spanning the years 1991-2006. We show that firms from euro-countries that previously had weak currencies have increased both their equity and debt financing compared to the control group. We also show that results are stronger for firms that hail from less financially developed euro-countries, and that large firms from industries that are dependent on external financing have increased their debt financing more. These results support the hypothesis that improved access to capital markets in the euro-area has enabled increased external financing, especially debt financing.
Number of Pages in PDF File: 58
Keywords: euro, external financing, supply of capital, financial development, financial dependence
JEL Classification: F33, F36, G32working papers series
Date posted: February 10, 2011 ; Last revised: March 27, 2012
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