Corporate ownership and capital structure: evidence from Romania
Alina Țaran ()
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Alina Țaran: Izmir University of Economics, Izmir, Turkey
Eastern Journal of European Studies, 2019, vol. 10(1), 133-150
This study explores the relation between local and foreign corporate ownership and capital structure of Romanian listed companies (as proxied by debt ratio, short-term debt ratio, and long-term debt ratio in total assets). Our empirical analysis indicates that corporations, as shareholders of public companies, determine a reduction in the overall need of external debts of the investee firms. However, foreign corporate shareholders promote a short-term indebtedness policy of non-financial companies listed on the regulated segment of Bucharest Stock Exchange. In contrast, local corporate shareholders have a negative influence on the short-term debt of their affiliates. Our findings provide a better understanding of financing decisions of domestic entities, and consequently, may contribute to efficient investing and management decisions of business actors in Romania, and other European frontier markets.
Keywords: foreign ownership; debt ratios; frontier markets; developing economies; Central and Eastern European countries (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:jes:journl:y:2019:v:10:p:133-150
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