Corporate equity finance in Austria – impediments and possible improvements

Peter Breyer (), Eleonora Endlich (), Dieter Huber (), Doris Oswald (), Christoph Prenner (), Lukas Reiss (), Martin Schneider () and Walter Waschiczek ()
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Peter Breyer: Oesterreichische Nationalbank
Eleonora Endlich: Oesterreichische Nationalbank
Dieter Huber: Off-Site Banking Analysis and Strategy Division
Doris Oswald: Oesterreichische Nationalbank
Christoph Prenner: Oesterreichische Nationalbank
Lukas Reiss: Oesterreichische Nationalbank, Economic Analysis Division
Walter Waschiczek: Oesterreichische Nationalbank, Economic Analysis Division

Monetary Policy & the Economy, 2021, issue Q3/21, 39-57

Abstract: This study examines the state of play of equity financing in Austria and highlights challenges Austrian companies face in raising equity capital. The equity ratios of Austrian companies had been improving steadily before the onset of the COVID-19 pandemic, which has been weighing considerably on corporate equity levels. The decrease of equity levels would, however, be about twice as high in the absence of the support measures taken to alleviate the economic effects of the pandemic. The bulk of Austrian companies’ equity is sourced from the rest of the world, while the domestic financial sector plays only a minor role in providing equity funding. Impediments to raising capital externally include business owners’ reluctance to share control with external investors, information deficits and data gaps as well as differences in the tax treatment of debt and equity (“debt bias”). Equity supply is limited because investors lack information on the economic situation of capital-seeking companies and because investments in unlisted companies are less liquid. Together with representatives of national and international institutions and market participants, we identified ways to strengthen the equity base of Austrian companies. Cases in point are providing both tax incentives and intermediation support for equity finance and establishing public-private partnerships.

Keywords: corporate finance; equity; institutional investors (search for similar items in EconPapers)
JEL-codes: E61 G1 G2 G32 (search for similar items in EconPapers)
Date: 2021
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