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UK and US multinational corporations capital structure: different approaches to shareholder value maximization

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  • Floarea Iosub Dobrica

    ()
    (The Department of Economics, Quantitative Analysis and Business Information Systems, Faculty of Economics and Business Administration, Alexandru Ioan Cuza University)

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    Abstract

    The shareholder value maximization is the keystone of the actual stage of capitalism. The objective function of publicly quoted corporations is nowadays the maximization of the shareholders' wealth, i.e. the sum of dividends and capital gains. Despite the increasing international financial opening, the shareholder value model, usually associated with UK and US, is typically presented as opposed to that of Continental Europe (i.e. Germany, France) and Japan. Yet, less attention is paid to the particularities of the shareholder value model across its representative countries. Are American and British corporations using similar financial strategies in response to shareholders exigencies? The empirical analysis conducted herein allows us to assert that, despite the association of both countries to the same model, there are striking differences in the financing strategies of UK and US MNCs.

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    Bibliographic Info

    Article provided by Alexandru Ioan Cuza University, Faculty of Economics and Business Administration in its journal Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi.

    Volume (Year): 54 (2007)
    Issue (Month): (November)
    Pages: 126-132

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    Handle: RePEc:aic:journl:y:2007:v:14:p:126-132

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    Postal: Universitatea Al. I. Cuza; B-dul Carol I nr. 22; Iasi
    Phone: 004 0232 201070
    Fax: 004 0232 217000
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    Web page: http://anale.feaa.uaic.ro/anale/
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    Related research

    Keywords: shareholder value; multinational corporations (MNCs); capital structure; agency problem; market timing; payout ratio; stock buyback; equity-issue.;

    References

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    1. Jeffrey A. Wurgler & Malcolm P. Baker, 2001. "Market Timing and Capital Structure," Yale School of Management Working Papers ysm181, Yale School of Management.
    2. Myers, Stewart C., 1984. "Capital structure puzzle," Working papers 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    3. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    4. Myers, Stewart C, 1984. " The Capital Structure Puzzle," Journal of Finance, American Finance Association, vol. 39(3), pages 575-92, July.
    5. Stewart C. Myers, 1984. "Capital Structure Puzzle," NBER Working Papers 1393, National Bureau of Economic Research, Inc.
    6. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
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