Financial Pressure and Balance Sheet Adjustment by UK Firms

Andrew Benito () and Garry Young
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Andrew Benito: Banco de España

No 209, Working Papers from Banco de España

Abstract: This paper examines the financial policies and balance sheet adjustment of companies. Using a large panel of quoted UK firms, we estimate models for dividends, new equity issuance and investment, relating them to debt adjustment. The results suggest that while dividends are sticky in the short run, they are an important means of balance sheet adjustment in the long run. Other evidence supports the idea that companies actively target their balance sheet by variation in dividends, new equity issues and investment. There is evidence for financial pressure effects of debt-servicing costs on investment and dividends but not new equity issuance.

Keywords: Financial pressure; dividends; equity issues; debt; investment; company panel data (search for similar items in EconPapers)
JEL-codes: C23 E52 G35 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2002-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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http://www.bde.es/f/webbde/SES/Secciones/Publicaci ... o/02/Fic/dt0209e.pdf First version, April 2002 (application/pdf)

Related works:
Journal Article: Financial Pressure and Balance Sheet Adjustment by Firms* (2007)
Working Paper: Financial pressure and balance sheet adjustment by UK firms (2002)
Working Paper: Financial Pressure and Balance Sheet Adjustment by UK Firms (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:0209

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