The Euro Is Good After All: Corporate Evidence

Arturo Bris (), Yrjö Koskinen () and Mattias Nilsson
Additional contact information
Arturo Bris: Yale School of Management, Postal: 135 Prospect Street, New Haven, CT 06511-3729, USA
Mattias Nilsson: Swedish Institute for Financial Research, Postal: Saltmätargatan 19A, SE-113 59 Stockholm, Sweden, http://www.sifr.org

No 9, SIFR Research Report Series from Institute for Financial Research

Abstract: In this paper we study the changes in corporate valuation, investments, and financing choices induced by the formation of Economic and Monetary Union (EMU) in Europe. We use corporate-level data from ten countries that adopted the euro, the three EU countries that did not join EMU, as well as Norway and Switzerland. We show that the introduction of the euro has increased valuations for large firms in EMU countries, especially in countries that had experienced currency crisis. Firm values have also increased for firms that were previously exposed to currency risks irrespective of size. Investments have increased for all firms, but the effects are bigger for large firms and for firms coming from countries with experiences of currency depreciations. The increase in investments has been financed mainly via debt issues. The evidence provided here supports the view that the introduction of the euro has lowered firms’ cost of capital by eliminating currency risks among the countries that have adopted the common currency, and by further increasing capital market integration in Europe.

Keywords: Economic and Monetary Union (EMU); the euro; valuation; investment; debt; equity; cost of capital; currency risk (search for similar items in EconPapers)
JEL-codes: F33 F36 G32 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2002-11-15
New Economics Papers: this item is included in nep-cfn, nep-eec and nep-ifn
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sifr.org/PDFs/europaper.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
Working Paper: The Euro Is Good After All: Corporate Evidence (2002)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:sifrwp:0009

Access Statistics for this paper

More papers in SIFR Research Report Series from Institute for Financial Research Institute for Financial Research Drottninggatan 89, SE-113 60 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Anki Helmer ().