IDEAS home Printed from https://ideas.repec.org/p/wpa/wuwpfi/9706002.html
   My bibliography  Save this paper

Equity of European Industriel Corporations from 1991 to 1993

Author

Listed:
  • Michel Delbreil

    (Banque de France)

  • Bernard Paranque

    (Banque de France)

  • Jose Ramon Cano

    (Bank of Spain)

  • Hans Friderichs

    (Deutsch Bundesbank)

  • Benoit Gress

    (European Commission DGII)

  • Franz Partsch

    (Austrian National Bank)

  • Franco Varetto

    (ltalian Balance Sheet Office)

  • .

Abstract

Throughout the Member States of the European Union, economic policy debate has centred on the terms of corporate financing, and in particular on whether the companies of each country have sufficient equity to compete in a single market. Moreover, faced with the risk of corporate insolvency, credit institutions consider a certain equity level to be one of several indicators of creditworthiness. Given this situation and within the framework of the work of the European Committee of Central Balance Sheet Offices, Germany, Austria, Spain, France and Italy and the second General Directorate of the European Commission invited a working group , to compare the f-inancial autonomy of European industriel companies. This study covered the period 1991 to 1993 and examined several issues. Do corporate equity levels vary according to the country ? Do these levels vary according to company size, regardless of the country? Do small companies have a specific position in each country? This study is based on an évaluation of corporate solvency, given that equity is used by companies and their financial partners to control risk exposure. After a brief reminder of the role of equity, the study sums up the research conducted since the publication in 1958 of the paper by Modigliani and Miller and gives a critical analysis of the empirical findings of intenational comparisons. All such research must begin by identifying and solving the financial and statistical methodological problems inherent to comparisons of the financing conditions of different countries. The work conducted gives rise to clear conclusions. - Corporate equity levels vary from country to country. These differences are at least partially related to variations in taxation, bankruptcy regulations, the organization of the banking system, the relationship between banks and companies and the financing practices of each country. - An overall analysis is insufficient and must be complemented by an analysis by company size. - The situation of the companies in each country can not be evaluated without taking into account financial requirements. - In France, regardless of the size of the company, the share of equity in overall financial resources appears larger than in other countries. Moreover, the difference between the equity of small and medium-sized companies and that of large corporations is narrower than in Germany or Austria. It should also be noted that this company classification is relatively recent in France.

Suggested Citation

  • Michel Delbreil & Bernard Paranque & Jose Ramon Cano & Hans Friderichs & Benoit Gress & Franz Partsch & Franco Varetto & ., 1997. "Equity of European Industriel Corporations from 1991 to 1993," Finance 9706002, EconWPA, revised 29 Oct 2000.
  • Handle: RePEc:wpa:wuwpfi:9706002
    as

    Download full text from publisher

    File URL: http://econwpa.repec.org/eps/fin/papers/9706/9706002.pdf
    Download Restriction: no

    More about this item

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • G - Financial Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpfi:9706002. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA). General contact details of provider: http://econwpa.repec.org .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.