Title: Stock listing and financial flexibility
Authors: Schoubben, Frederiek
Van Hulle, Cynthia
Issue Date: Mar-2010
Conference: Annual Meeting of the Southwestern Finance Association edition:49 location:Dallas, United States date:4-6 March 2010
Abstract: A stock listing usually reflects easy access to external equity financing. Although scant empirical evidence exists on the matter, the literature suggests that the enhanced standing towards creditors – which would result in easier access to debt financing – is an extra advantage of being publicly quoted. This paper tests whether a stock listing leads to more flexibility of debt financing, using a data set of listed and comparably large unlisted companies. The data reveals that listing mainly increases the flexible use of debt financing. The difference between listed and unlisted firms is most apparent when investment opportunities tend to arrive in low-cash-flow states. Furthermore, as the unlisted firms in the dataset are all large consolidating business groups, the results indicate that a group structure does not substitute for listing. The results are robust to different estimation methods.
Publication status: published
KU Leuven publication type: IMa
Appears in Collections:Research Center Finance, Leuven
Department of Accountancy, Finance and Insurance (AFI), Leuven - miscellaneous
Faculty of Economics and Business (FEB) - miscellaneous
Department of Financial Management, Campus Carolus Antwerp

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