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A Cross-country Study of Corporate Financial Structure and the Flexibility Issue / Eine Querschnittsanalyse der Finanzstruktur von Unternehmen und der Flexibilitätsaspekt

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  • Rivaud-Danset Dorothée

    (Université de Reims, Champagne-Ardennes, UFR des sciences économiques et gestion, 57bis rue Pierre Taittinger, F-51096 Reims, France)

Abstract

Firms need flexibility, defined as the capacity to react to unexpected situations. Corporate flexibility improves with liquidity. For non-financial firms, sources of liquidity are twofold: internal, by keeping cash, and external, through a borrowing power, usually from banks. On the average, a high rate of cash testifies to a lack of mutual trust between bank and firm, typical of a ‘procedure-based’ banking model and a ‘Exit-dominated’ financial system (versus a ‘Voice-dominated’ one). Data Analysis supports the view that cash balance is an indicator of corporate financial pattern which should be taken into account to characterize national financial systems. This article brings a new perspective to the analysis of financial system differences by focusing on corporate liquidity.

Suggested Citation

  • Rivaud-Danset Dorothée, 2001. "A Cross-country Study of Corporate Financial Structure and the Flexibility Issue / Eine Querschnittsanalyse der Finanzstruktur von Unternehmen und der Flexibilitätsaspekt," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 221(5-6), pages 689-709, October.
    • Handle: RePEc:jns:jbstat:v:221:y:2001:i:5-6:p:689-709
    DOI: 10.1515/jbnst-2001-5-613
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    References listed on IDEAS

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    6. Henry, Claude, 1974. "Investment Decisions Under Uncertainty: The "Irreversibility Effect."," American Economic Review, American Economic Association, vol. 64(6), pages 1006-1012, December.
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