Firm Complexity and Capital Structure: Evidence from Italian Diversified Firms

Monteforte, Daniele; Staglianò, Raffaele

doi:10.1002/mde.2660

Cited by 10 publications

(18 citation statements)

References 85 publications

(157 reference statements)

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“…The risk aversion of managers can increase agency costs following the implementation of geographic diversification strategy. Monteforte and Staglianò () support the hypothesis that the complexity coming from diversification reduces debt levels. We also explain this result by considering the diversification, which generates gains related to revenue streams from different international environments that are not completely correlated.…”

Section: Resultsmentioning

confidence: 84%

“…Few studies have focused on the role of diversification strategy in the choice of capital structure in the corporate literature, (Monteforte & Staglianò, ). However, there has been no consensus on this relationship, which may be explained by the coinsurance effect (Lewellen, ): the transaction cost (Kochhar & Hitt, ) and the agency cost (Jensen, ).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Moreover, Monteforte and Staglianò (2015) observed that product diversification and international diversification have positive effects on corporate leverage. However, their interaction shows a negative effect on leverage.…”

Section: Diversification and Capital Structurementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

“…Thereby, researchers were interested in the relationship between diversification strategies and corporate capital structure. However, the findings remain controversial (Monteforte & Staglianò, 2015). Furthermore, literature on strategy and finance confirms the existence of a close link between the strategic situation and performance (Park & Jang, 2013).…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Diversification, capital structure, and performance: A simultaneous equation approach

Jouida

Hellara

2017

Manage Decis Econ

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This paper examines the relationships between diversification, capital structure, and performance jointly on the financial sector. Our dataset covers 412 French financial institutions over the period ranging from 2002 to 2012. Furthermore, we use a three‐stage least squares to check reverse causality. Our three‐stage least squares results show positive significant simultaneous interdependencies between performance and leverage. Performance reduction and debt levels increase are associated with activity diversification. Performance and leverage reduction is due to geographic diversification. Our estimation confirms reverse association between the interaction of diversification, leverage, and performance. Moreover, the findings are robust after taking into account alternative measures of diversification.

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Section: Resultsmentioning

confidence: 84%

Section: Literature Reviewmentioning

confidence: 99%

Section: Diversification and Capital Structurementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Diversification, capital structure, and performance: A simultaneous equation approach

Jouida

Hellara

2017

Manage Decis Econ

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Corporate diversification and debt financing: Do family shareholders protect their control rights?

Subramaniam

Hosen

2022

Manage Decis Econ

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The study explored the relationship between corporate diversification and the debt choice of listed 712 Malaysian family firms for the period from 2016 to 2020. Tobit regression results revealed that industrial diversified firms preferred debt financing, while geographically diversified firms rejected debt. With family control, firms that conducted both types of diversification activities rejected debt financing. Further, for the case of maturity structure of debt, family firms engaged in diversification activities tend to borrow short-term debt, thereby reducing their ownership's risk of dilution and boosting their short-term market goals by improving the creditors' shortterm monitoring function. Policy implications are discussed.

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Understanding the dynamics of capital structure, corporate governance, and corporate social responsibility in high- and low-leveraged US and Chinese firms

Mahmood

Arslan

Younas

et al. 2023

Environ Sci Pollut Res

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Corporate social responsibility turned into a global sensation from the inception of the twenty-first century in the corporate world and grabbed immense engrossment from all stakeholders in their decision-making process. Capital structure and corporate governance practices are the well-mellowed facets of corporate finance literature. In this study, the moderating role of corporate social responsibility (CSR) between corporate governance and leverage of the US and Chinese listed firms has been established, with a further extension of analyzing the moderating role of CSR between corporate governance and leverage in high vs low leveraged firms and high CSR vs low CSR firms as the novelty of this study and has never been examined in both economies and globally. The data of 1989 Chinese-listed firms from 28 sectors of the economy and 6640 US-listed firms from 27 sectors of the economy has been taken from 2001 to 2019 and analyzed through fixed effect regression and system generalized method of moment (GMM). Results of the study reveal that CSR and corporate governance are negatively associated with the leverage of both Chinese and US firms. Moreover, the moderating role of CSR has established between corporate governance and leverage negative relationship. The moderating role of CSR in the relationship of leverage and corporate governance is established only in low-leveraged firms whereas it is insignificant in high-leveraged firms. System GMM confirms the signs and significance of the regression results; that is why regression results are robust and reliable, and there is no endogeneity problem in our model. The study also gives an insight for future research on high- and low-leveraged firms and firms with more CSR score than less CSR score with other dimensions such as firm performance and firm value variables.

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Firm Complexity and Capital Structure: Evidence from Italian Diversified Firms

Cited by 10 publications

References 85 publications

Diversification, capital structure, and performance: A simultaneous equation approach

Diversification, capital structure, and performance: A simultaneous equation approach

Corporate diversification and debt financing: Do family shareholders protect their control rights?

Understanding the dynamics of capital structure, corporate governance, and corporate social responsibility in high- and low-leveraged US and Chinese firms

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