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Denis Davydov (PhD student in University of Vaasa, Dept of Accounting and Finance): Debt structure and corporate performance in Emerging Markets

This paper examines the effects of public and bank debt financing on firm performance in
emerging markets. Using data on 700 publicly traded firms from the BRIC countries, it is
documented that bank debt may have a positive effect on firm profitability. While overall
market reaction on bank debt financing is negative, it is found that fully bank-financed
firms lose less of their market value. Main findings remain unchanged after addressing
potential endogeneity issues by introducing a novel instrumental variable. Overall, the
results suggest that higher levels of bank financing may have positive effects on firm
profitability and market valuation.

JEL classification: G15; G30; G32
Keywords: debt financing, bank debt, firm performance, emerging markets

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Pyydämme teitä ilmoittautumaan etukäteen Liisa Mannilalle,
puh. 010 831 2268, sähköposti liisa.mannila (at)

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