Coverage of financing deficit in firms in financial distress under the pecking order theory

Azofra, Sergio Sanfilippo; López-Gutiérrez, Carlos; Torre-Olmo, Begoña

doi:10.15240/tul/001/2016-4-008

Cited by 3 publications

(1 citation statement)

References 15 publications

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“…-SIZE: corresponds to the logarithm of total assets (Cuñat-Martínez, 2007;Kestens et al, 2012;Sanfilippo-Azofra et al, 2016).…”

Section: Control Variablesmentioning

confidence: 99%

The Empirical Study of the Impact of Firm- and Country-level Factors on Debt Financing Decisions of ICT Firms

Alexeeva-Alexeev¹

2023

Sci. Ann. Econ. Bus.

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The capital structure has been extensively analysed in the empirical literature. Despite of the great contribution of the technological industry to the global economy, little research has been conducted regarding corporate finance of ICT firms. Moreover, the previous literature barely considers the effect of macroeconomic variables on financial decisions, focusing much more on internal determinants, such as cash flow, firm’s size or growth opportunities. The objective of this work is to reduce this gap by disentangling the reasons behind the financial decisions of technological firms. The sample included 1,510 public ICT firms from 23 countries over the period 2004 – 2019 (17,342 observations). The variables used in this study are obtained from S&P Capital IQ, World Development Indicators, Main Science and Technology Indicators from OECD, and FMI dataset. The two-step system generalized method of moments (GMM) was used as methodology. Consistent with the extant literature, more profitable and liquid ICT firms and those with an increased non-debt tax shields are less leveraged. However, the companies which present higher risk, measured as volatility of EBIT, increase their use of debt financing. Contrary to the findings of many other studies, the analysis of a firm’s size and tangible assets shows non-conclusive results. Regarding macroeconomic determinants, only economic growth and foreign direct investment inflows were found to generate a positive effect on financial decisions of ICT firms. The findings of this work can be used to design and develop policies, measures, and facilitate mechanisms for optimal management of the financing decisions of ICT firms.

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“…-SIZE: corresponds to the logarithm of total assets (Cuñat-Martínez, 2007;Kestens et al, 2012;Sanfilippo-Azofra et al, 2016).…”

Section: Control Variablesmentioning

confidence: 99%

The Empirical Study of the Impact of Firm- and Country-level Factors on Debt Financing Decisions of ICT Firms

Alexeeva-Alexeev¹

2023

Sci. Ann. Econ. Bus.

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Earning Volatility, Capital Structure Decisions and Financial Distress by SEM

Morteza

Mehdi

Mansourfar

2019

Emerging Markets Finance and Trade

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How Do Slovak Small and Medium-Sized Enterprises Make Decision on Sources of Finance?

Vinczeová¹,

Kaščáková²

2017

EMS

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The traditional financial theory generally presents models and approaches applicable mostly in financial management of large enterprises. Small and medium-sized enterprises are characterized by a number of specific features, which significantly differentiates them from large ones and determinates their limited access to appropriate sources of finance. In light of these differences and specific features, it is essential to draw particular attention to the decisionmaking on sources of finance in these enterprises which have a more risky profile and are much more vulnerable to the business environment and its changes. The paper focuses on the target debt ratio of Slovak small and medium-sized enterprises and its relationship with their superior business objective, size and age. It also examines the factors influencing this area of decisionmaking. The main aim of the paper then is to find out how Slovak small and medium-sized enterprises make decisions on sources of finance to perform their business activities and identify the main factors influencing these decisions. According to the results obtained, half of Slovak small and medium-sized enterprises have set the target debt ratio. It is more present in enterprises tending to prefer growth and development as their superior goal. The weak positive relationship between the existence of the target debt ratio and the size of an enterprise was also revealed. However, the existence of the target debt ratio is not determined by the age of an enterprise. Finally, the most important factors influencing financial decision-making of Slovak small and medium-sized enterprises include cost of capital and their long-term survival.

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Coverage of financing deficit in firms in financial distress under the pecking order theory

Abstract: The fi nancing decisions adopted by fi rms in fi nancial distress are very important because most of the strategy decisions such as investments, market entry, or

Cited by 3 publications

References 15 publications

The Empirical Study of the Impact of Firm- and Country-level Factors on Debt Financing Decisions of ICT Firms

The Empirical Study of the Impact of Firm- and Country-level Factors on Debt Financing Decisions of ICT Firms

Earning Volatility, Capital Structure Decisions and Financial Distress by SEM

How Do Slovak Small and Medium-Sized Enterprises Make Decision on Sources of Finance?

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