Abstract
We use panel data techniques to analyze the debt and equity financing strategies of the non-financial firms operating in the G8 countries and the selected emerging economies and compare them with those adopted during the financial crisis of 2007–2008. For this purpose, we analyze corporate financial data of 9952 firms in the G8 and 10,531 firms in the emerging economies over 12 years (2003–2014) to understand the corporate financing strategies in two different business environments. We find an increase in corporate debt financing in the G8 as well as the emerging economies during the period of financial crisis. Specifically, the firms operating in the G8 increased short-term debt financing whereas the firms operating in the emerging economies increased long-term debt financing. We also find institutional factors playing their role significantly but differently during the period of financial crisis.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
Canada, France, Germany, Italy, Japan, United Kingdom, United States, Russian Federation, Brazil, China, Egypt, India, Indonesia, Iran, Israel, Malaysia, Mexico, Nigeria, Pakistan, Philippines, Poland, South Africa, Taiwan and Turkey.
- 2.
According to (Wooldridge 2012) fixed-effects model has no problem to deal with an unbalanced panel data.
- 3.
References
Ahsan T, Man W, Qureshi MA (2016a) Mean reverting financial leverage: theory and evidence from Pakistan. Appl Econ 48(5):379–388
Ahsan T, Wang M, Qureshi MA (2016b) Firm, industry and country level determinants of capital structure: evidence from Pakistan. South Asian J Glob Bus Res (Forthcoming)
Ahsan T, Wang M, Qureshi MA (2016c) How do they adjust their capital structure along their life cycle? An empirical study about capital structure over life cycle of Pakistani firms. J Asia Bus Stud 10(3):276–302
Alves P, Francisco P (2015) The impact of institutional environment on the capital structure of firms during recent financial crises. Q Rev Econ Finance 57:129–146
Alves PFP, Ferreira MA (2011) Capital structure and law around the world. J Multinatl Financ Manag 21:119–150
Baltagi BH (2005) Econometric analysis of panel data, 3rd edn. Wiley, New York
Bhamra HS, Kuehn L-A, Strebulaev IS (2008) The aggregate dynamics of capital structure and macroeconomic risk. Rev Financ Stud 23(12):4187–4241. doi:10.1093/rfs/hhq075
Bokpin GA (2009) Macroeconomic development and capital structure decisions of firms. Stud Econ Financ 26(2):129–142
Booth L, Aivazian V, Kunt AD, Maksimovic V (2001) Capital structure in developng countries. J Financ 56(1):87–130
Custodio C, Ferreira MA, Laureano L (2013) Why are US firms using more short-term debt? J Financ Stud 108:182–212
DeAngelo H, Mesulis RW (1980) Optimal capital structure under corporate and personal taxation. J Financ Econ 8:3–29
Demirguc-Kunt A, Maksimovic V (1996) Stock market development and financing choices of firms. World Bank Econ Rev 10(02):341–369
Ergungor OE (2004) Market- vs. bank-based financial systems: do rights and regulations really matter? J Bank Financ 28:2869–2887
Erkens DH, Hung M, Matos P (2012) Corporate governance in the 2007–2008 financial crisis: evidence from financial institutions worldwide. J Corp Financ 18:389–411
Fan JPH, Titman S, Twite G (2012) An international comparison of capital structure and debt maturity choices. J Financ Quant Anal 47(01):23–56
Frank MZ, Goyal VK (2008) Trade-off and pecking order theories of debt. Handbook Empir Corp Financ 2:135–202
González VM (2015) The financial crisis and corporate debt maturity: the role of banking structure. J Corp Financ 35:310–328
Gungoraydinoglu A, Öztekin Ö (2011) Firm- and country-level determinants of corporate leverage: some new international evidence. J Corp Financ 17:1457–1474
Ivashina V, Scharfstein D (2010) Bank lending during the financial crisis of 2008. J Financ Econ 97(3):319–338
Jõeveer K (2013) Firm, country and macroeconomic determinants of capital structure: evidence from transition economies. J Comp Econ 41:294–308
Jong A d, Kabir R, Nguyen TT (2008) Capital structure around the world: the roles of firm- and country-specific determinants. J Bank Financ 32:1954–1969
Kashyap AK, Zingales L (2010) The 2007–8 financial crisis: lessons from corporate finance. J Financ Econ 97:303–305
La Porta R, Lopez-De-Silanes F, Shleifer A, Vishny RW (1997) Legal determinants of external finance. J Financ 52(03):1131–1150
La Porta R, Lopez-De-Silanes F, Shleifer A, Vishny RW (1998) Law and finance. J Polit Econ 106(06):1113–1155
Lee B-S (2012) Bank-based and market-based financial systems: time-series evidence. Pac Basin Financ J 20:173–197
Modigliani F, Miller MH (1963) Corporate income taxes and the cost of capital: a correction. Am Econ Rev 53:433–443
Muradoğlu YG, Onay C, Phylaktis K (2014) European integration and corporate financing. Int Rev Financ Anal 33:138–157
Myers SC (1984) The capital structure puzzle. J Financ 39:575–592
Myers SC, Majluf NS (1984) Corporate financing and investment decisions when firms have information that investors do not have. J Financ Econ 13(2):187–221
Nachane DM (2006) Econometrics: theoretical foundations and empirical perspectives. Oxford University Press, New Delhi
Nelson RR, Winter SG (1982) An evolutionary theory of economic change. Harvard University Press, Cambridge, MA
Ott LR, Longnecker M (2001) Statistical methods and data analysis, 5th edn. Duxbury, Pacific Grove, CA
Rajan RG, Zingales L (1995) What do we know about capital structure? Some evidence from international data. J Financ 50(5):1421–1460
Santos JAC (2011) Bank corporate loan pricing following the subprime crisis. Rev Financ Stud 24(06):1916–1943
Sheikh NA, Qureshi MA (2014) Crowding-out or shying-away: impact of corporate income tax on capital structure choice of firms in Pakistan. Appl Financ Econ 24(19):1249–1260
Vermoesen V, Deloof M, Laveren E (2013) Long-term debt maturity and financing constraints of SMEs during the global financial crisis. Small Bus Econ 41:433–448
Wooldridge JM (2012) Introductory econometrics: a modern approach, 5th edn. South-Western, Cengage Learning, Mason
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2017 Springer International Publishing AG
About this chapter
Cite this chapter
Qureshi, M.A., Ahsan, T., Azid, T. (2017). Equity and Debt Financing Strategies to Fuel Global Business Operations During Crisis. In: Hacioğlu, Ü., Dinçer, H. (eds) Global Financial Crisis and Its Ramifications on Capital Markets. Contributions to Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-47021-4_22
Download citation
DOI: https://doi.org/10.1007/978-3-319-47021-4_22
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-47020-7
Online ISBN: 978-3-319-47021-4
eBook Packages: Economics and FinanceEconomics and Finance (R0)