Debt specialization and performance of European firms
Caterina Giannetti ()
Journal of Empirical Finance, 2019, vol. 53, issue C, 257-271
Relying on a cross-country comparable sample of European manufacturing firms, this paper investigates the relationship between the level of debt specialization (i.e. composition of the various types of debt) and firm turnover reduction in a time of crisis. The analysis is conducted applying the generalized propensity score matching methodology for continuous variables recently developed by Hirano and Imbens (2004) and Imai and Van Dyk (2004). This quasi-experimental setting allows estimating the (average) firm turnover reduction at each level of debt concentration (i.e. the dose–response function). Consistent with the theoretical analysis of De Fiore and Uhlig (2015) on the flexibility of the financial system, results from the empirical analysis suggest that firms having a diversified debt structure are less likely to experience a severe turnover reduction.
Keywords: Debt concentration; European firm financing; Generalized propensity score (search for similar items in EconPapers)
JEL-codes: C24 G31 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:empfin:v:53:y:2019:i:c:p:257-271
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