Do European Firms Behave as if they Converge Toward a Target Capital Structure?

29 Pages Posted: 20 Apr 2016

See all articles by Denis Marinšek

Denis Marinšek

University of Ljubljana - Faculty of Economics

Marko Pahor

University of Ljubljana - Faculty of Economics

Dusan Mramor

University of Ljubljana - Faculty of Economics

Roman Luštrik

University of Ljubljana - Biotechnical Faculty

Date Written: June 2016

Abstract

Utilizing a large sample of European firms, we demonstrate that firms behave as if they converge toward a target capital structure (“leveraging process”), defined by traditional trade‐off variables. Moreover, we find that such behavior is evident regardless of firm size and ownership structure. We compare the degree of convergence among different groups of firms and find that medium‐sized firms, firms from the new EU member states, and firms from Southern Europe exhibit a stronger “leveraging process” than the rest of the sampled firms. Our results also highlight that the economic crisis, which began in the late 2008, impacted the leveraging dynamics; however, the general pattern of convergence remained unchanged.

Suggested Citation

Marinšek, Denis and Pahor, Marko and Mramor, Dusan and Luštrik, Roman, Do European Firms Behave as if they Converge Toward a Target Capital Structure? (June 2016). Journal of International Financial Management & Accounting, Vol. 27, Issue 2, pp. 97-125, 2016. Available at SSRN: https://ssrn.com/abstract=2767227 or http://dx.doi.org/10.1111/jifm.12046

Denis Marinšek (Contact Author)

University of Ljubljana - Faculty of Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia

Marko Pahor

University of Ljubljana - Faculty of Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia
+38615892629 (Phone)
+38615892698 (Fax)

Dusan Mramor

University of Ljubljana - Faculty of Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia
+386 1 589 2400 (Phone)
+386 1 589 2698 (Fax)

Roman Luštrik

University of Ljubljana - Biotechnical Faculty ( email )

Vecna pot 111
Ljubljana
Slovenia

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
0
Abstract Views
205
PlumX Metrics