Asimakopoulos, Ioannis and Athanasoglou, Panayiotis and Siriopoulos, Konstantinos (2006): External financing, growth and capital structure. Published in: RePEc No. Economic Bulletin 26 (January 2006): pp. 59-77.
Download (2MB) | Preview
The study focuses on Greek non-financial firms listed on the Athens Exchange in the period 1998-2002 and shows that only a small fraction of these firms were in a position to finance their growth by exclusively using internal resources with the findings varying depending on the firms’ size. For those firms that had to resort to external financing, short-term financing was favoured compared to long-term financing. While the need for short-term debt did not differ significantly between small and large firms, the need for additional long-term debt was clearly greater for large firms. As regards the determinants of capital structure(as measured by the total-debt-to-assets ratio), the effect of profitability is negative and statistically significant supporting the “pecking order” theory. As expected, tangible assets and firm size have a positive and statistically significant effect on the total debt-to-assets ratio, while short-term assets have the anticipated positive effect only on short-term external financing.
|Item Type:||MPRA Paper|
|Original Title:||External financing, growth and capital structure|
|English Title:||External financing, growth and capital structure|
|Keywords:||capital structure; Athens Exchange;|
|Subjects:||G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill|
|Depositing User:||PANAYIOTIS P. ATHANASOGLOU|
|Date Deposited:||07. Jul 2011 15:44|
|Last Modified:||12. Feb 2013 06:31|
Bennet, M. and R. Donelly (1993), “The deter-minants of capital structure: Some UK evidence”, British Accounting Review, 43-59.
Berger, P.G., E. Ofek and D.L. Yermack (1997), “Managerial entrenchment and capital structure decisions”, Journal of Finance, 52, 4, 1411-38.
Bevan, A.A. and J. Danbolt (2002), “Capital structure and its determinants in the United Kingdom – A decompositional analysis”, Applied Financial Economics, 12, 3, 159-70.
Bradley, M., G.A. Jarrell and K. E. Han (1984), “On the existence of an optimal capital structure: theory and evidence”, Journal of Finance, 39, 3, 857-80.
DeAngelo, H. and R.W. Masulis (1980),”Optimal capital structure under corporate and personal taxation”, Journal of Financial Economics, 8, 1, 3-30.
Demirgüç-Kunt, ∞. and V. Maksimovic (1996), “Stock market development and firms’ financing choices”, World Bank Economic Review, 10, 341-69.
Demirgüç-Kunt, ∞. and V. Maksimovic (1998), “Law, finance and firm growth”, Journal of Finance, 53, 6, 2107-37.
Fazzari, S.M., R.G. Hubbard and B.C. Petersen(1988),“Financing constraints and corporate investment”, Brookings Papers on Economic Activity, 19, 141-95.
Ferri, M. and G. Jones (1979),“Determinants of financial structure: a new methodological approach”, Journal of Finance, 34, 631-44.
Harris, M. and A. Raviv (1991),“The theory of capital structure”, Journal of Finance, 46, 1, 297-355.
Helwege J. and N. Liang (1996),“Is there a pecking order? Evidence from a panel of IPO firms”, Journal of Financial Economics, 40, 3, 429-58.
Higgins, R.C. (1977), “How much growth can a firm afford?”, Financial Management, 6, 3-16.
Jensen, M. and W. Meckling (1976),“Theory of the firm: managerial behavior, agency cost and capital structure”, Journal of Financial Economics, 3, 4, 305-60.
Jordan J., J. Lowe and P. Taylor (1998),“Strategy and financial policy in UK small firms”, Journal of Business, Finance and Accounting, 25, January/March, 1-27.
Junk, K., Y. Kim and R. Stulz (1996),“Timing, investment opportunities, managerial discretion, and the security issue decision”, Journal of Financial Economics, 42, 159-85.
Kaplan, S.N. and L. Zingales (1996),“Do investmentcash flow sensitivities provide a useful measure of financing constraints”, Quarterly Journal of Economics, 112, 169-217.
Kester, C.W. (1986),“Capital and ownership structure: A comparison of United States and Japanese manufacturing corporations”,Financial Management,Spring, 5-16.
King, R.B. and R. Levine (1993),“Finance and growth: Schumpeter might be right”, Quarterly Journal of Economics, 108, 717-38.
Levine, R. and S. Zervos (1998),“Stock markets, banks, and economic growth”, American Economic Review, 88, 537-59.
March, P. (1982), “The choice between equity and debt: An empirical study”, Journal of Finance, 37, 121-44.
Michaelas, N., F. Chittenden and P. Poutziouris (1999), “Financial policy and capital structure choice in UK SMEs: Empirical evidence from company panel data”, Small Business Economics, 12, 113-30.
Miller, M. H. (1977),“Debt and Taxes”, Journal of Finance, 32, 261-76.
Modigliani, F. and M. Miller (1958),“The cost of capital, corporate finance and the theory of investment”, American Economic Review, 48, 3, 261-97.
Modigliani, F. and M. Miller (1963) “Corporate income taxes and the cost of capital: a correction”, American Economic Review, 53, 3, 433-43.
Myers, S. C. and N. S. Majluf (1984),“Corporate financing and investment decisions when firms have information that investors do not have”, Journal of Financial Economics, 13, 2, 187-221.
Myers, S. C. (1984), “The capital structure puzzle”, Journal of Finance, 39, 3, 575-92.
Rajan, R. G. and L. Zingales (1995), “What do we know about capital structure: some evidence from international data”, Journal of Finance, 50, 5, 1421-60.
Remmers, L., A. Stonehill, R. Wright and T. Beekhuisen,(1974), “Industry and size as debt ratio determinants in manufacturing internationally”, Financial Management, Summer, 24-32.
Ross, S.A., R.W. Westerfield and B.D. Jordan, (1995) Fundamentals of Corporate Finance, Richard D. Irwin, Chicago.
Stiglitz, J. and A. Weiss (1981),“Credit rationing in markets with imperfect information”, American Economic Review, 71, 3, 393-410.
Titman, S. and R. Wessels (1988), “The deter-minants of capital structure choice”, Journal of Finance, 43, 1, 1-19.
Van der Wijst, N. and R. Thurik (1993), “Deter-minants of small firm debt ratios: An analysis of retail panel data”, Small Business Economics, 5, 55-65.
Vasiliou, D., N. Eriotis and N. Daskalakis (2004), “The determinants of capital structure: evidence from the Greek market”, Paper presented at the 2nd annual conference of the Hellenic Finance Association, Athens.
Voulgaris, F., D. Asteriou and G. Agiomirgianakis (2002), “Capital structure, asset utilisation, profitability and growth in the Greek manufacturing sector”, Applied Economics, 34, 11, 1379-88.
Voulgaris, F., D. Asteriou and G. Agiomirgianakis(2004), “Size and determinants of capital structure in the Greek manufacturing sector”, International Review of Applied Economics, 18, 2, 247-62.
Watson, R. and N. Wilson (1998), “Small and mediumsize enterprise financing: some empirical implications of a pecking order”, Leeds Business School, Discussion Paper.