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| Author: | Weill, L. |
| Title: | Leverage and corporate performance: Does institutional environment matter? |
| Journal: | Small business economics
2008 : MAR, VOL. 30:3, p. 251-265 |
| Index terms: | corporate governance financial structure medium-sized businesses |
| Freeterms: | leverage |
| Language: | eng |
| Abstract: | The purpose of this study is to provide new evidence on the link between leverage and corporate performance by introducing two findings to the literature. Frontier efficiency techniques are used to measure performance of medium-sized European firms, and a maximum likelihood procedure is used to compute a stochastic cost frontier and the parameters of an equation linking cost inefficiency to leverage. The main findings show that the relationship between leverage and corporate performance depends on the country in question. This result indicates the importance of institutional factors. The efficiency of the legal system and the access to bank credit are then suggested to affect the link between leverage and corporate performance. |
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