Working Paper: CEPR ID: DP1392
Authors: Francesca Cornelli; Richard Portes; Mark E. Schaffer
Abstract: According to more recent theories on the optimal capital structure, the availability of external financing is not always guaranteed, or it may come at different costs, depending on the methods of financing used (debt vs. equity, long-term debt vs. short-term debt, etc.). Under such circumstances, firms? investment and financing decisions are interdependent. This paper studies the optimal capital structure for enterprises in transition economies and investigates the actual capital structure and its determinance in Hungary and Poland.
Keywords: capital structures; transition economies; enterprise; debt
JEL Codes: G32; P34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Supply of credit (E51) | Profitability (L21) |
| Demand for credit (E51) | Profitability (L21) |
| Profitability (L21) | Internal financing (D25) |
| Internal financing (D25) | Debt relative to total assets (G32) |
| Profitability (L21) | Debt relative to total assets (G32) |
| State ownership (H13) | Lending patterns (G21) |
| Credit rationing (G21) | Desired capital structure (G32) |
| Leverage ratios (G32) | Tangibility (L15) |
| Leverage ratios (G32) | Profitability (L21) |
| Leverage ratios (G32) | Size (L25) |
| Leverage ratios (G32) | State ownership (H13) |