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The Impact of Financial and Legal Structures on the Performance of European Listed Firms

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  • Hani El-Chaarani

Abstract

This study examines the impact of capital structure on the performance of listed firms in the European region by considering different systems of legal protection. Based on 5,050 listed firms in eight European countries, the results of the study reveal that owners in low level of legal investor protection countries are more likely to use the firm’s capital structure to serve their own interests. In the case of high level of legal protection the results indicate that debt is used as a disciplinary tool to constrain the expropriation of private benefits.

Suggested Citation

  • Hani El-Chaarani, 2015. "The Impact of Financial and Legal Structures on the Performance of European Listed Firms," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 9(2), pages 39-52.
    • Handle: RePEc:ibf:ijbfre:v:9:y:2015:i:2:p:39-52
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    Cited by:

    1. Hani El-Chaarani & Zouhour El-Abiad, 2019. "Analysis of Capital Structure and Performance of Banking Sector in Middle East Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 9(2), pages 1-11.
    2. Jaroslav Mazanec, 2023. "Capital Structure Theory in the Transport Sector: Evidence from Visegrad Group," Mathematics, MDPI, vol. 11(6), pages 1-17, March.
    3. Hani El-Chaarani, 2017. "The Mutual Impacts of Corporate Governance Dimensions and Legal Protection Systems on the Performance of European Banks: A Post-Crisis Study," European Research Studies Journal, European Research Studies Journal, vol. 0(2A), pages 538-567.
    4. Hani El-Chaarani & Rebecca Abraham & Yahya Skaf, 2022. "The Impact of Corporate Governance on the Financial Performance of the Banking Sector in the MENA (Middle Eastern and North African) Region: An Immunity Test of Banks for COVID-19," JRFM, MDPI, vol. 15(2), pages 1-21, February.

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    More about this item

    Keywords

    Capital Structure; Financial Performance; Legal Protection; Financial Behavior; Leverage;
    All these keywords.

    JEL classification:

    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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