Does export intensity of heterogeneous firms affect leverage? Evidence from a small open economy

Imran Ramzan and Ömer Lütfi Gebizlioglu

Economics and Business Letters, 2023, vol. 12, issue 4, 356-365

Abstract: Exports at firm level improve the financial performance and thereby contribute to economic growth. Exporting activities require additional financing and become a challenge to manufacturing firms, thus affecting managerial financing decisions. This study explores the impact of export intensity on leverage by using a dataset of manufacturing firms. The results of two-step system GMM reveal that export intensity negatively influences the leverage. We find that a firm’s size positively impacts the leverage, while cash holding has a negative connection with leverage. Finally, we note that board size exhibits a positive relationship to leverage. These findings suggest important policy implications for export promotion, specifically for a small open economy. The results are robust to different sensitivity checks.

Date: 2023
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