Abstract
The paper presents results of an ongoing research project on corporate financing patterns in Central and Eastern Europe (CEE) since 1999. It addresses three broad issues. What are the specifics of corporate financing in CEE compared to countries in Western Europe? What country institutional and company factors may explain the similarities and differences between capital structures in the EU-15 and New Member States (NMS)? What are the major convergence and divergence trends in corporate financing patterns in an enlarged Europe? The study analyses the interactions between country institutional differences, firm ownership structures, other firm-specific characteristics and corporate financial patterns in both the EU-15 and NMS. It summarises the firm-level evidence and outlines several unresolved questions and major dimensions for further research.
Similar content being viewed by others
References
Baker, Malcolm and Jeffrey Wurgler, ‘Market Timing and Capital Structure’, 57 Journal of Finance (2002) 1–32.
Bebchuk, Lucian and Jessie Fried, ‘Executive Compensation As an Agency Problem’, 17 Journal of Economic Perspectives (2003) 71–92.
Berger, Philip, Eli Ofek and David Yermack, ‘Managerial Entrenchment and Capital Structure Decisions’, 50 Journal of Finance (1997) 1411–1430.
Booth, Laurence, Varouj Aivazian, Asli Demirguc-Kunt and Vojislav Maksi-movic, ‘Capital Structures in Developing Countries’, 56 Journal of Finance (2001) 87–130.
Brailsford, Timothy, Barry Oliver and Sandra Pua, ‘On the Relation between Ownership Structure and Capital Structure’, 42 Accounting and Finance (2002) 1–26.
Colombo, Emilio, ‘Determinants of Corporate Capital Structure: Evidence from Hungarian Firms’, 33 Applied Economics (2001) 1689–1701.
Cornelli, Francesca, Richard Portes and Mark Schaffer, The Capital Structure of Firms in Central and Eastern Europe, CEPR Discussion Paper No. 1392 (London, CEPR 1996).
Dewenter, Kathryn and Paul Malatesta, ‘State-Owned and Privately Owned Firms: An Empirical Analysis of Profitability, Leverage, and Labor Intensity’, 91 American Economic Review (2001) 320–334.
Du, Julan and Yi Dai, ‘Ultimate Corporate Ownership Structures and Capital Structures: Evidence from East Asian Economies’, 13 Corporate Governance: An International Review (2005) 60–71.
Fan, Joseph, Sheridan Titman and Garry Twite, An International Comparison of Capital Structure and Debt Maturity Choices, CIG Working Paper Series (2005).
Friend, Irwin and Larry Lang, ‘An Empirical Test of the Impact of Managerial Self-Interest on Corporate Capital Structure’, 43 Journal of Finance (1988) 271–281.
Giannetti, Mariassunta, Do Better Institutions Mitigate Agency Problems? Evidence from Corporate Finance Choices, SITE, Stockholm School of Economics (2002) mimeo.
Graham, John, ‘Taxes and Corporate Finance: A Review’, 16 Review of Financial Studies (2003) 1075–1129.
Gugler, Klaus, Dennis Mueller and Burcin Yurtoglu, ‘The Impact of Corporate Governance on Investment Returns in Developed and Developing Countries’, 113 Economic Journal (2003) 511–539.
Gugler, Klaus, Dennis Mueller and Burcin Yurtoglu, ‘Corporate Governance Around the World’, 20 Oxford Review of Economic Policy (2004) 129–156.
Gugler, Klaus, Dennis Mueller and Burcin Yurtoglu, ‘Corporate Governance and the Determinants of Investment’ 163 Journal of Institutional and Theoretical Economics (2007) 598–626.
De Haas, Ralph and Marga Peeters, ‘The Dynamic Adjustment towards Target Capital Structures of Firms in Transition Economies’, 14 Economics of Transition (2006) 133–169.
Harris, Milton and Artur Raviv, ‘Capital Structure and the Informational Role of Debt’, 45 Journal of Finance (1990) 321–49.
Hussain, Qaizar and Eugene Nivorozhkin, The Capital Structure of Listed Companies in Poland, IMF Working Paper 97/175 (1997).
Jensen, Michael, ‘Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers’, 76 American Economic Review (1986) 323–29.
Jensen, Michael and William Meckling, ‘Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure’, 3 Journal of Financial Economics (1976) 305–60.
Jung, Kooyul, Young-Cheol Kim and Rene Stulz, ‘Timing, Investment Opportunities, Managerial Discretion, and the Security Issue Decision’, 42 Journal of Financial Economics (1996) 159–85.
Kaufmann, Daniel Aart Kraay and Massimo Mastruzzi, Governance Matters IV: Governance Indicators for 1996-2004, World Bank Working Paper 4280 (2005).
Kornai, Janos, Eric Maskin and Gerard Roland, ‘Understanding the Soft Budget Constraint’, 41 Journal of Economic Literature (2003) 1095–1136.
KPMG, Corporate Tax Rate Survey, January 2003.
Mankiw, Gregory, ‘Comments “New Issues in Corporate Finance” by Colin Mayer’, 32 European Economic Review (1988) 1183–1186.
Mayer, Colin, ‘New Issues in Corporate Finance’, 32 European Economic Review (1988) 1167–1183.
Mayer, Colin, ‘Financial Systems, Corporate Finance, and Economic Development’, in R. Glenn Hubbard, ed., Asymmetric Information, Corporate Finance, and Investment (Chicago, University of Chicago Press 1990).
Miller, Merton, ‘The Modigliani-Miller Propositions after Thirty Years’, 2 Journal of Economic Perspectives (1988) 99–120.
Mueller, Dennis, The Corporation: Growth, Diversification and Mergers (London, Routledge 2003).
Mueller, Dennis, Helmut Dietl and Evgeni Peev, ‘Ownership, Control and Performance in Large Bulgarian Firms’, 7 Journal for Institutional Innovation, Development and Transition (2003) 71–88.
Mueller, Dennis and Evgeni Peev, ‘Ownership Structures and Investment in Transition Economies’, Financial Development, Integration and Stability (Cheltenham, Edward Elgar Publishing Ltd. 2006) 322–336.
Myers, Stewart, ‘The Determinants of Corporate Borrowing’, 5 Journal of Financial Economics (1977) 147–75.
Myers, Stewart, ‘Capital Structure’, 15 Journal of Economic Perspectives (2001) 81–102.
Myers, Stewart and Nicholas Majluf, ‘Corporate Financing and Investment Decisions When Firms Have Information That Investors Do Not Have’, 12 Journal of Financial Economics (1984) 187–221.
Nenovsky, Nikolay, Evgeni Peev and Todor Yalamov, ‘Banks-Enterprises Nexus under a Currency Board: Empirical Evidence from Bulgaria’, 34 Revue d’Etudes Comparatives Est-Ouest (RECEO) (2004) 53–81.
Nivorozhkin, Eugene, ‘Capital Structures in Emerging Stock Markets: The Case of Hungary’, 40 Developing Economies (2002) 166–87.
Nivorozhkin, Eugene, Financing Choices of Firms in EU Accession Countries, Department of Economics, Göteborg University (2004) mimeo.
Shleifer, Andrei and Robert Vishny, ‘A Survey of Corporate Governance’, 52 Journal of Finance (1997) 737–783.
Stulz, René, ‘Managerial Discretion and Optimal Financing Policies’, 26 Journal of Financial Economics (1990) 3–27.
Rajan, Raghuram and Luigi Zingales, ‘What Do We Know about Capital Structure? Some Evidence from International Data’, 50 Journal of Finance (1995) 1421–1460.
Revoltella, Debora, ‘Financing Enterprises in the Czech Republic: Debt and Firm-Specific Variables’, 34 Economics of Planning (2001) 231–246.
Singh, Ajit and Javed Hamid, Corporate Financial Structures in Developing Countries, Technical Paper 1 (IFC, Washington DC 1992).
Singh, Ajit, Corporate Financial Pattern in Industrializing Economies: A Comparative International Study, Technical Paper 2 (IFC, Washington DC 1995).
Zwiebel, Jeffrey, ‘Dynamic Capital Structure under Managerial Entrenchment’, 86 American Economic Review (1996) 1197–1215.
Author information
Authors and Affiliations
Additional information
This research was supported by a Marie Curie Intra-European Fellowship within the Sixth European Community Framework Programme and the Austrian National Bank’s Jubiläumsfonds (Project No. 11782). We thank Dennis Mueller and Ajit Singh for helpful discussions.
Rights and permissions
About this article
Cite this article
Peev, E., Yurtoglu, B. Corporate Financing in the New Member States: Firm-Level Evidence for Convergence and Divergence Trends. Eur Bus Org Law Rev 9, 337–381 (2008). https://doi.org/10.1017/S1566752908003376
Published:
Issue Date:
DOI: https://doi.org/10.1017/S1566752908003376