دانلود رایگان مقاله انگلیسی نوسانات ساختاری سرمایه در اروپا - نشریه الزویر

Abstract

Contrary to the predictions of the trade-off theory, we find that many companies in Europe had substantial variation in their capital structures between 2006 and 2016. We show that this pattern occurred across countries. Companies with the most volatile debt ratios tended to be smaller, and were less profitable. Their high debt volatility was partly due to high volatility in operating and investing activities, and partly due to a reduced propensity to let cash balances and equity payouts absorb the fluctuations.

VI. Conclusion

The empirical results presented in this paper confirm, using data on European companies, that although some firms do maintain strict capital structures, there are many others which allow their capital structures to move substantially over time. Companies with the most volatile debt tend to be smaller and less profitable. The cash flow constraint was used to illustrate that companies which raised debt tended to have been spending much more on investments.

The theory of the Corporate Finance Trilemma, put forward in this paper, argues that due to the cash flow constraint firms cannot choose their ideal policies for equity payouts, cash holdings and debt simultaneously. Some companies will prefer to maintain a stable debt level, but they must then allow some other variables to fluctuate. Other companies may prefer to pursue optimal policies in equity payouts and cash holdings, but they must then accept high volatility in debt.

The concept of the Trilemma was then used to explain why some companies have stable capital structures, whilst others are much more flexible. Firms with strict capital structures generally have low volatility in Cash from Operating and Investing activities, and any variance that does exist is absorbed, by changes in cash holdings and equity payouts, meaning that debt can remain very stable. In contrast, firms with flexible capital structures have high volatility in CFOI which is not absorbed by changes in cash or equity payouts, meaning that debt must act as the residual and become highly volatile.