Estimating the Borrowing Behavior of French and German Firms. An Econometric Analysis / Verschuldungsverhalten französischer und deutscher Unternehmen. Eine ökonometrische Analyse

Abstract

SummaryThis paper investigates the borrowing behavior of 2,900 French and 1,300 German firms over the 1987-95 period. Both samples based on data sets of the Banque de France and the Deutsche Bundesbank not only include large but also small and medium-sized enterprises. Applying GMM techniques, we estimate identical debt equations for the two total samples and by size class. Despite the large differences between the two countries in term of debt trends over time and size class the main result is the similarity of a few determinants between France and Germany. E.g. we find that firm growth has a positive impact on borrowing according to the theory of signalling whereas the negative correlation of profit and debt supports pecking order approach and the cost of finance has a negative impact on leverage, too. Additionally, the study can provide some insights for the monetary transmission mechanism in both EMU member countries.

Redistribution of Resources: Sustainable System Mechanisms for Enterprise Migration

“…erefore, the will of the senior management team plays a vital role in the internal decision-making of the enterprise [18]. Specifically, we believe that the top management team's attachment to the current location of the enterprise is a pull that hinders the migration behaviour of the enterprise [19].…”