DETERMINANTS OF THE CAPITAL STRUCTURE OF EUROPEAN FIRMS: THE MODERATING ROLE OF EFSF/ESM FINANCIAL ASSISTANCE PROGRAMS

The present study has investigated the moderating effect of the European Financial Stability Facility (EFSF) / European Stability Mechanism (ESM) support to the firms’ indebtness. Using dynamic panel data, three models were estimated and aimed at the determination of the way that EFSF/ESM financial...

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Main Authors:	Georgios Chatzinas, Symeon Papadopoulos
Format:	article
Language:	EN
Published:	Universiti Utara Malaysia 2021
Subjects:	capital structure trade-off pecking order efsf/esm financial programs eurozone Finance HG1-9999
Online Access:	https://doaj.org/article/c722cfcbd6b64d9aa6f27af8fe181c61
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spelling	oai:doaj.org-article:c722cfcbd6b64d9aa6f27af8fe181c612021-12-05T07:00:39ZDETERMINANTS OF THE CAPITAL STRUCTURE OF EUROPEAN FIRMS: THE MODERATING ROLE OF EFSF/ESM FINANCIAL ASSISTANCE PROGRAMS10.32890/ijbf2022.17.1.41675-722Xhttps://doaj.org/article/c722cfcbd6b64d9aa6f27af8fe181c612021-12-01T00:00:00Zhttp://e-journal.uum.edu.my/index.php/ijbf/article/view/ijbf2022.17.1.4https://doaj.org/toc/1675-722XThe present study has investigated the moderating effect of the European Financial Stability Facility (EFSF) / European Stability Mechanism (ESM) support to the firms’ indebtness. Using dynamic panel data, three models were estimated and aimed at the determination of the way that EFSF/ESM financial assistance programs could influence the impact of five firm-specific characteristics, namely growth, profitability, size, tangibility and non-debt tax shield on the capital structure of European firms. Data from 2,086 firms for the period 2003 – 2016 were used, and two dummy variables; one for the EFSF/ESM support period and one for any kind of economic crisis period were formed. The results indicated that pecking order prevailed over trade-off theory. Economic crises did not affect severely the firm-characteristics’ effects, but the EFSF/ESM programs influence appeared in three cases. During the period of EFSF/ESM assistance, profitability’s negative effect on long-term debt ratio disappeared and on total debt ratio strengthened, growth’s positive impact on total debt ratio diminished and non-debt tax shield acquired positive influence on total debt ratio. These changes might be explained by the increased levels of tax rates and decreased levels of uncertainty that the EFSF/ ESM programs caused, as well as by the reluctance of lenders to provide new funds. Georgios ChatzinasSymeon PapadopoulosUniversiti Utara Malaysiaarticlecapital structuretrade-offpecking orderefsf/esm financial programseurozoneFinanceHG1-9999ENInternational Journal of Banking and Finance, Vol 17, Iss 1, Pp 81-108 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	capital structure trade-off pecking order efsf/esm financial programs eurozone Finance HG1-9999
spellingShingle	capital structure trade-off pecking order efsf/esm financial programs eurozone Finance HG1-9999 Georgios Chatzinas Symeon Papadopoulos DETERMINANTS OF THE CAPITAL STRUCTURE OF EUROPEAN FIRMS: THE MODERATING ROLE OF EFSF/ESM FINANCIAL ASSISTANCE PROGRAMS
description	The present study has investigated the moderating effect of the European Financial Stability Facility (EFSF) / European Stability Mechanism (ESM) support to the firms’ indebtness. Using dynamic panel data, three models were estimated and aimed at the determination of the way that EFSF/ESM financial assistance programs could influence the impact of five firm-specific characteristics, namely growth, profitability, size, tangibility and non-debt tax shield on the capital structure of European firms. Data from 2,086 firms for the period 2003 – 2016 were used, and two dummy variables; one for the EFSF/ESM support period and one for any kind of economic crisis period were formed. The results indicated that pecking order prevailed over trade-off theory. Economic crises did not affect severely the firm-characteristics’ effects, but the EFSF/ESM programs influence appeared in three cases. During the period of EFSF/ESM assistance, profitability’s negative effect on long-term debt ratio disappeared and on total debt ratio strengthened, growth’s positive impact on total debt ratio diminished and non-debt tax shield acquired positive influence on total debt ratio. These changes might be explained by the increased levels of tax rates and decreased levels of uncertainty that the EFSF/ ESM programs caused, as well as by the reluctance of lenders to provide new funds.
format	article
author	Georgios Chatzinas Symeon Papadopoulos
author_facet	Georgios Chatzinas Symeon Papadopoulos
author_sort	Georgios Chatzinas
title	DETERMINANTS OF THE CAPITAL STRUCTURE OF EUROPEAN FIRMS: THE MODERATING ROLE OF EFSF/ESM FINANCIAL ASSISTANCE PROGRAMS
title_short	DETERMINANTS OF THE CAPITAL STRUCTURE OF EUROPEAN FIRMS: THE MODERATING ROLE OF EFSF/ESM FINANCIAL ASSISTANCE PROGRAMS
title_full	DETERMINANTS OF THE CAPITAL STRUCTURE OF EUROPEAN FIRMS: THE MODERATING ROLE OF EFSF/ESM FINANCIAL ASSISTANCE PROGRAMS
title_fullStr	DETERMINANTS OF THE CAPITAL STRUCTURE OF EUROPEAN FIRMS: THE MODERATING ROLE OF EFSF/ESM FINANCIAL ASSISTANCE PROGRAMS
title_full_unstemmed	DETERMINANTS OF THE CAPITAL STRUCTURE OF EUROPEAN FIRMS: THE MODERATING ROLE OF EFSF/ESM FINANCIAL ASSISTANCE PROGRAMS
title_sort	determinants of the capital structure of european firms: the moderating role of efsf/esm financial assistance programs
publisher	Universiti Utara Malaysia
publishDate	2021
url	https://doaj.org/article/c722cfcbd6b64d9aa6f27af8fe181c61
work_keys_str_mv	AT georgioschatzinas determinantsofthecapitalstructureofeuropeanfirmsthemoderatingroleofefsfesmfinancialassistanceprograms AT symeonpapadopoulos determinantsofthecapitalstructureofeuropeanfirmsthemoderatingroleofefsfesmfinancialassistanceprograms
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DETERMINANTS OF THE CAPITAL STRUCTURE OF EUROPEAN FIRMS: THE MODERATING ROLE OF EFSF/ESM FINANCIAL ASSISTANCE PROGRAMS

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