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Corporate ownership and capital structure: evidence from Romania

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  • Alina ȚARAN

    () (Izmir University of Economics, Izmir, Turkey)

Abstract

This study explores the relation between local and foreign corporate ownership and capital structure of Romanian listed companies (as proxied by debt ratio, short-term debt ratio, and long-term debt ratio in total assets). Our empirical analysis indicates that corporations, as shareholders of public companies, determine a reduction in the overall need of external debts of the investee firms. However, foreign corporate shareholders promote a short-term indebtedness policy of non-financial companies listed on the regulated segment of Bucharest Stock Exchange. In contrast, local corporate shareholders have a negative influence on the short-term debt of their affiliates. Our findings provide a better understanding of financing decisions of domestic entities, and consequently, may contribute to efficient investing and management decisions of business actors in Romania, and other European frontier markets.

Suggested Citation

  • Alina ȚARAN, 2019. "Corporate ownership and capital structure: evidence from Romania," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 10, pages 133-150, June.
  • Handle: RePEc:jes:journl:y:2019:v:10:p:133-150
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    File URL: http://ejes.uaic.ro/articles/EJES2019_1001_TAR.pdf
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    Cited by:

    1. Vijayakumaran, Ratnam, 2021. "Impact of managerial ownership on investment and liquidity constraints: Evidence from Chinese listed companies," Research in International Business and Finance, Elsevier, vol. 55(C).

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