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Financial leverage and export quality: evidence from France

Author

Listed:
  • Flora Bellone

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • Michel Bernini
  • Sarah Guillou

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

Abstract

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.

Suggested Citation

  • Flora Bellone & Michel Bernini & Sarah Guillou, 2015. "Financial leverage and export quality: evidence from France," SciencePo Working papers Main hal-03470073, HAL.
    • Handle: RePEc:hal:spmain:hal-03470073
    DOI: 10.1016/j.jbankfin
    Note: View the original document on HAL open archive server: https://hal-sciencespo.archives-ouvertes.fr/hal-03470073
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    References listed on IDEAS

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    Cited by:

    1. Xuan Leng & Pengcheng Li & Yuming Zheng, 2023. "Does the expansion of local government debt affect the export quality?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(4), pages 2495-2515, June.
    2. Choi, ByeongHwa, 2023. "The impact of financial development on innovation-based exports: Do all firms benefit equally?," The Quarterly Review of Economics and Finance, Elsevier, vol. 88(C), pages 81-100.
    3. Ha, Le Thanh, 2023. "The role of financial development in enhancing trades in environmental goods: International insights from 119 countries," Journal of Commodity Markets, Elsevier, vol. 29(C).

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    More about this item

    Keywords

    Capital structure; Investment; Output quality; Exports;
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