Corporate ownership and capital structure: evidence from Romania
This study explores the relation between local and foreign corporate ownership and capital structure of Romanian listed companies (as proxied by debt ratio, short-term debt ratio, and long-term debt ratio in total assets). Our empirical analysis indicates that corporations, as shareholders of public...
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| Format: | Article |
| Language: | English |
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Alexandru Ioan Cuza University of Iasi
2019-06-01
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| Series: | Eastern Journal of European Studies |
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| Online Access: | http://ejes.uaic.ro/articles/EJES2019_1001_TAR.pdf |
| Summary: | This study explores the relation between local and foreign corporate ownership and capital structure of Romanian listed companies (as proxied by debt ratio, short-term debt ratio, and long-term debt ratio in total assets). Our empirical analysis indicates that corporations, as shareholders of public companies, determine a reduction in the overall need of external debts of the investee firms. However, foreign corporate shareholders promote a short-term indebtedness policy of non-financial companies listed on the regulated segment of Bucharest Stock Exchange. In contrast, local corporate shareholders have a negative influence on the short-term debt of their affiliates. Our findings provide a better understanding of financing decisions of domestic entities, and consequently, may contribute to efficient investing and management decisions of business actors in Romania, and other European frontier markets. |
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| ISSN: | 2068-651X 2068-6633 |