Capital Structure, Rates of Return and Financing Corporate Growth: Comparing Developed and Emerging Markets, 1994-2000

35 Pages Posted: 1 May 2003

See all articles by Jack D. Glen

Jack D. Glen

International Finance Corporation (IFC)

Ajit Singh

United Nations; University of Cambridge

Date Written: March 17, 2003

Abstract

Abstract: Firm level data from financial statements for nearly 8,000 listed companies in 22 emerging and 22 developed countries over the period 1994-00 are examined. Capital structure, asset structure, rates of return and financing patterns are compared across countries and over time. In emerging markets (EM) the ratio of debt to total assets and the ratio of current assets to total assets is lower than in developed markets (DM). EM companies employ higher levels of fixed assets (relative to total assets) than do DM companies. Returns on assets, after adjusting for local inflation, are statistically and economically less in EM than in DM countries, especially in the early years of the sample. Country effects are more important than sector effects in explaining cross-firm variation in the variables, but individual firm effects account for most of the variation.

Keywords: Capital structure, rates of return, emerging markets

JEL Classification: F3, G3

Suggested Citation

Glen, Jack Dean and Singh, Ajit, Capital Structure, Rates of Return and Financing Corporate Growth: Comparing Developed and Emerging Markets, 1994-2000 (March 17, 2003). Available at SSRN: https://ssrn.com/abstract=397001 or http://dx.doi.org/10.2139/ssrn.397001

Jack Dean Glen (Contact Author)

International Finance Corporation (IFC) ( email )

2121 Pennsylvania Avenue, NW
Washington, DC 20433
United States
202-473-8641 (Phone)

Ajit Singh

United Nations ( email )

New York, NY 10017
United States

University of Cambridge ( email )

Austin Robinson Building
Sidgwick Avenue
Cambridge, CB3 9DD
United Kingdom
+ 44 1223 350434 (Phone)
+ 44 1223 740479 (Fax)

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