The cultural dimension in companies' leverage. New evidence using panel data for a European macroeconomic context

Abstract

PurposeThe main objective of this work is to show that the traditional specific characteristics of companies as well as cultural and religious dimensions can influence the leverage of companies in different macro-environmental systems.Design/methodology/approachTo achieve this aim, the authors have used data from 1.568 firms from 7 European countries between 2010 and 2016, and the models were estimated by using panel data methodology, specifically the generalized method of moments (GMM) estimation method by Arellano and Bover (1995) and Blundell and Bond (1998).FindingsOverall, the empirical results point out that the cultural moderating factors are essential in determining companies' capital structure, regardless of the country's legal origin. The study results also show that traditional variables, intrinsic to management, macroeconomic environment and religion, have a central role in capital structure, namely for the civilian countries.Originality/valueAs far as the authors know, this is the first work that uses, in addition to the traditional specific characteristics of companies, cultural dimensions and religion, as determinants of debt levels, in different legal systems for Europe.

Cultural determinants of capital structure in Indonesian banking

“…The mean leverage of banks is 3.35%, reflecting the proportion of Indonesian banks' assets funded by non-deposit and deposit liabilities. The average leverage in Indonesian banks is higher than in previous studies on non-financial companies in other countries, such as Neves et al (2022); Al-Ahdal et al (2020). However, it is lower than the average for banks in other countries like Pakistan (Sheikh & Qureshi, 2017).…”

“…The capital structure signifies the amalgamation of various funding sources a company manages (Neves et al, 2022). The financing decisions directly impact the company's value, making it relevant for investors, directors, and other stakeholders (Puspitasari, 2022).…”

What factors impact debt levels in the health sector? Evidence for a bank system-oriented country

“…The literature grants different signs and significance between size and debt levels (L opez-Gracia and Sogorb-Mira, 2008;Neves et al, 2022bNeves et al, , 2023. Since Kraus and Litzenberger (1973), with their trade-off theory, several authors showed a positive relationship between company size and debt, given that larger companies have less information asymmetry and, consequently, incur lower risks of bankruptcy (Serrasqueiro, 2008).…”