Type
Article
Title
Financial leverage and export quality: evidence from France
Author(s)
BELLONE Flora - Observatoire français des conjonctures économiques (Author)
BERNINI Michel - School of International Studies (Author)
GUILLOU Sarah - Observatoire français des conjonctures économiques (Author)
Volume
59
Pages
280 - 296 p.
ISSN
03784266
DOI
10.1016/j.jbankfin
Keywords
Capital structure, Investment, Output quality, Exports
Abstract
EN
Does corporate financial structure matter for a firm’s ability to compete in international markets through output quality? This study answers this question by using firm-level export and balance sheet data covering a large sample of French manufacturing exporters over the period 1997–2007. The main result is that there is a negative causal relation between a firm’s leverage and export quality, where quality is inferred from the estimation of a discrete choice model of foreign consumers’ demand. This result is robust across different specifications and estimation techniques. In addition, by estimating investment models we find that the negative impact of leverage on quality is consistent with theories predicting that the agency cost of debt determines suboptimal investment.
BIBLIOGRAPHIC QUOTE
EXPORT