The Structure of Corporate Finance in Belgium: An Empirical Investigation
AbstractThis paper studies the factors influencing the capital structure of Belgian corporate finance since 1984. Using three different datasets, aggregate balance sheets, aggregate flows of funds and a large panel of individual firms followed up during 10 years, we are able to give some empirical evidence for the importance of institutional features in the choice of corporate financing decisions. At the aggregate level, large firms are generally more highly levered; however, in the past ten years we observe a clear reduction in bank debt and a sharp increase in financial assets. Small firms on the other hand are less highly levered but have shifted toward greater long-term debt in recent years. Using flows of funds, we find that small firms have corporate financing decisions that remain roughly constant through time with a clear dominance of self-finance. In contrast we note for large firms an increased reliance on external sources of finance. Possible explanations of these patterns are investigated in our econometric study of panel data. We find that Belgian firms rely primarily on internal funds which seems to confirm the ''pecking order'' story of Myers and Majluf (1984). We also find that the emergence of coordination centers in the late 1980's explain much of the changing financial structure of large Belgian firms. These structures allow a higher leverage while they reduce the proportion of bank finance. Finally, control considerations are shown to explain the high level of financial assets on large firms' balance sheets.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 1997019.
Date of creation: 01 Sep 1997
Date of revision:
Capital structure; Belgium;
Find related papers by JEL classification:
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
This paper has been announced in the following NEP Reports:
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Malika HAMADI, 2002. "Ownership Strucure ad the Performance of Belgian Listed Firms," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2002015, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- Paxil Butzen & Catherine Fuss & Philip Vermeulen, 2002.
"The interest rate and crédit channels in Belgium: an investigation with micro-level firm data,"
Brussels Economic Review,
ULB -- Universite Libre de Bruxelles, vol. 45(3), pages 5-36.
- Paul Butzen & Catherine Fuss & Philip Vermeulen, 2001. "The interest rate and credit channels in Belgium: an investigation with micro-level firm data," Working Paper Research 18, National Bank of Belgium.
- Butzen, Paul & Fuss, Catherine & Vermeulen, Philip, 2001. "The interest rate and credit channels in Belgium: An investigation with micro-level firm data," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 A3-1, International Conferences on Panel Data.
- Butzen, Paul & Fuss, Catherine & Vermeulen, Philip, 2001. "The interest rate and credit channel in Belgium: an investigation with micro-level firm data," Working Paper Series 0107, European Central Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anne DAVISTER-LOGIST).
If references are entirely missing, you can add them using this form.