Does Internal Capital Market Membership Matter for Financing Efficiency? Evidence from the Euro Area
Autor(a) principal: | |
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Data de Publicação: | 2019 |
Outros Autores: | |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
Texto Completo: | http://hdl.handle.net/11144/4734 |
Resumo: | The paper investigates the efficiency of firms’ financing behavior, exploring the effect of the internal capital market (ICM) organizational form on the differences in the cost of capital, capital structure, and the speed of adjustment towards preferred capital structure, between ICM participants and stand-alone peer firms, using two balanced comparable panel data sets of euro area firms of 773 firms each, over the 2004–2013 period. Univariate statistical analysis, document that firms operating within an active ICM exhibit, on average, lower costs of capital than their comparable stand-alone counterparts. The paper also documents that on average financial leverage ratios are significantly higher for ICM firms than for stand-alone, and that both ICM and stand-alone firms tend to have preferred target leverage ratios. Results from dynamic panel data regression document that both, firms integrated in internal capital markets and single-segment firms, adjust dynamically their financial leverage towards their preferred targets at different speeds. These findings are consistent with the view that ICM membership is linked to information and agency problems, lowering ICM participants’ cost of capital, having target leverage ratios, and adjusting their capital structures differently than their stand-alone peers. |
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Does Internal Capital Market Membership Matter for Financing Efficiency? Evidence from the Euro Areafirm financingcost of capitalfinancial leverage targetsspeed of adjustmentinternal capital marketsbias-corrected estimatorsThe paper investigates the efficiency of firms’ financing behavior, exploring the effect of the internal capital market (ICM) organizational form on the differences in the cost of capital, capital structure, and the speed of adjustment towards preferred capital structure, between ICM participants and stand-alone peer firms, using two balanced comparable panel data sets of euro area firms of 773 firms each, over the 2004–2013 period. Univariate statistical analysis, document that firms operating within an active ICM exhibit, on average, lower costs of capital than their comparable stand-alone counterparts. The paper also documents that on average financial leverage ratios are significantly higher for ICM firms than for stand-alone, and that both ICM and stand-alone firms tend to have preferred target leverage ratios. Results from dynamic panel data regression document that both, firms integrated in internal capital markets and single-segment firms, adjust dynamically their financial leverage towards their preferred targets at different speeds. These findings are consistent with the view that ICM membership is linked to information and agency problems, lowering ICM participants’ cost of capital, having target leverage ratios, and adjusting their capital structures differently than their stand-alone peers.CICEE. Universidade Autónoma de Lisboa2021-01-12T11:39:36Z2019-01-01T00:00:00Z2019info:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/11144/4734enghttp://dx.doi.org/10.2139/ssrn.3038050Mota, Jorge HumbertoSantos, Mário Coutinho dosinfo:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2024-01-11T02:09:13Zoai:repositorio.ual.pt:11144/4734Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-20T01:31:42.039796Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse |
dc.title.none.fl_str_mv |
Does Internal Capital Market Membership Matter for Financing Efficiency? Evidence from the Euro Area |
title |
Does Internal Capital Market Membership Matter for Financing Efficiency? Evidence from the Euro Area |
spellingShingle |
Does Internal Capital Market Membership Matter for Financing Efficiency? Evidence from the Euro Area Mota, Jorge Humberto firm financing cost of capital financial leverage targets speed of adjustment internal capital markets bias-corrected estimators |
title_short |
Does Internal Capital Market Membership Matter for Financing Efficiency? Evidence from the Euro Area |
title_full |
Does Internal Capital Market Membership Matter for Financing Efficiency? Evidence from the Euro Area |
title_fullStr |
Does Internal Capital Market Membership Matter for Financing Efficiency? Evidence from the Euro Area |
title_full_unstemmed |
Does Internal Capital Market Membership Matter for Financing Efficiency? Evidence from the Euro Area |
title_sort |
Does Internal Capital Market Membership Matter for Financing Efficiency? Evidence from the Euro Area |
author |
Mota, Jorge Humberto |
author_facet |
Mota, Jorge Humberto Santos, Mário Coutinho dos |
author_role |
author |
author2 |
Santos, Mário Coutinho dos |
author2_role |
author |
dc.contributor.author.fl_str_mv |
Mota, Jorge Humberto Santos, Mário Coutinho dos |
dc.subject.por.fl_str_mv |
firm financing cost of capital financial leverage targets speed of adjustment internal capital markets bias-corrected estimators |
topic |
firm financing cost of capital financial leverage targets speed of adjustment internal capital markets bias-corrected estimators |
description |
The paper investigates the efficiency of firms’ financing behavior, exploring the effect of the internal capital market (ICM) organizational form on the differences in the cost of capital, capital structure, and the speed of adjustment towards preferred capital structure, between ICM participants and stand-alone peer firms, using two balanced comparable panel data sets of euro area firms of 773 firms each, over the 2004–2013 period. Univariate statistical analysis, document that firms operating within an active ICM exhibit, on average, lower costs of capital than their comparable stand-alone counterparts. The paper also documents that on average financial leverage ratios are significantly higher for ICM firms than for stand-alone, and that both ICM and stand-alone firms tend to have preferred target leverage ratios. Results from dynamic panel data regression document that both, firms integrated in internal capital markets and single-segment firms, adjust dynamically their financial leverage towards their preferred targets at different speeds. These findings are consistent with the view that ICM membership is linked to information and agency problems, lowering ICM participants’ cost of capital, having target leverage ratios, and adjusting their capital structures differently than their stand-alone peers. |
publishDate |
2019 |
dc.date.none.fl_str_mv |
2019-01-01T00:00:00Z 2019 2021-01-12T11:39:36Z |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
http://hdl.handle.net/11144/4734 |
url |
http://hdl.handle.net/11144/4734 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
http://dx.doi.org/10.2139/ssrn.3038050 |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf |
dc.publisher.none.fl_str_mv |
CICEE. Universidade Autónoma de Lisboa |
publisher.none.fl_str_mv |
CICEE. Universidade Autónoma de Lisboa |
dc.source.none.fl_str_mv |
reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação instacron:RCAAP |
instname_str |
Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
instacron_str |
RCAAP |
institution |
RCAAP |
reponame_str |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
collection |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
repository.name.fl_str_mv |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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1799136798502289408 |