Sogorb Mira, Francisco

This article explores the cash–cash flow relationship by comparing financially constrained and financially unconstrained companies. Unlike previous research, we test the sensitivity of cash to cash flow by considering unlisted firms as constrained and listed firms as unconstrained. Our empirical evidence is based on findings from Spanish firms and is consistent with the core rationale that unlisted firms face more difficulties than their listed counterparts when looking for funding from external markets. As a result, unlisted firms tend to hoard significant amounts of cash out of the generated cash flow, while listed firms do not. Our findings are robust to a number of additional empirical tests.

This study explores the role of taxes in explaining companies’ financing decisions. We test whether the corporate tax shields explanation of capital structure is applicable to firms listed on the Spanish stock exchange over the period 2007–2013. Taxes are found to be economically and statistically significant determinants of capital structure. Our results suggest that marginal tax rates affect the debt policies of Spanish listed companies, and the existence of non-debt tax shields constitutes an alternative to the use of debt as a tax shelter. Consistent with theoretical expectations, there is a stronger relation between debt and taxation in less levered firms. Finally, we empirically estimate the impact of the new thin-capitalization rule put forth by the Spanish government in 2012 on the financing behaviour of Spanish listed companies. Our empirical evidence supports the existence of a tax reform effect, where companies affected by interest deductibility limitations reduce their leverage more than companies that are not affected.

Purpose: The purpose of this study is to analyse the impact of the European Central Bank’s (ECB) Public Sector Purchase Programme (PSPP) on Spanish sovereign debt. Design/methodology/approach: The authors assess the impact of the PSPP on Spanish Government bonds from two different transmission channels (the signalling and the portfolio substitution) with two effects for each of them (the announcement and the expectation effects for the former and the stock and the rebalancing effects for the latter). The empirical study has been undertaken with event study methodology, controlled by macroeconomic variables, panel data and cross-sectional regression analyses. Findings: The results show that both the ECB’s purchases under the PSPP and the announcements reduced Spanish Government bond yields. Compared to previous literature the Spanish Government bond yields reductions are larger than those for other countries. Research limitations/implications: The authors’ approach to the impact of investors’ expectations is interesting, although they cannot draw evidence on this issue due to the lack of data. Practical implications: From an economic perspective, the ECB can change economic agents’ expectations without actually carrying out any programme, only by announcing such a programme. Originality/value: This paper contributes to the literature examining the PSPP from different transmission channels in Spain, taking into account the announcements, the expectations, the purchases and the variation in debt holdings relating to the PSPP from the beginning of the programme until 2020. Due to the large degree of heterogeneity across euro area countries, the results in this paper should improve our understanding of the relative differences in the impact of the PSPP and, thus, be of interest to academics and policymakers.

La Comisión Europea ha planteado un itinerario digital para los países miembros de la Unión Europea (UE) cuyo objetivo es abordar el reto de la transformación digital para 2030, lo que nos permitirá mejorar nuestra competitividad y bienestar al mismo tiempo que cuidamos del planeta. En este artículo, utilizaremos los datos de la UE, de España y los recogidos en una encuesta propia realizada a las Mercas, para elaborar un análisis comparativo del nivel de digitalización y el empleo de especialistas TIC (Tecnologías de la Información y Comunicaciones) de dichas Mercas con el de las empresas españolas y de la UE. Cabe destacar, entre los resultados obtenidos, que en los indicadores referidos al uso de software ERP (Enterprise Resource Management), tecnologías cloud y la realización de acciones de comunicación social media, las Mercas se encuentran por encima de la media de las PYMEs de la Unión Europea y de España.

Purpose: This study aims to identify whether Latin American (LA) firms are adopting any hedging strategy when designing Foreign Exchange Risk (FXR) measures. To that end, we explore the impact of several drivers of FXR management. Design/methodology/approach: The sample consists of 342 non-financial listed firms established in a group of representative countries of the LA region and covers the period from 2008 to 2016. Hypothesis testing is performed through a Logit model that measures the likelihood to adopt hedging practices. In addition, a Tobit test offers further insights into the derivatives users. Findings: We corroborate capital structure related hypotheses such as tax goals, financial distress, liquidity, and growth opportunities. In addition, both, ownership concentration and income tax payable seem to be negative and significant determinants of FXR coverage. Originality/value: Results reported in this study are relevant for the LA region with high tradition in raw materials and commodities exports. Our results show that LA firms still make limited use of derivatives and there is still much room for improvement. Hence, additional efforts to promote FXR hedging should be desirable, to meet authorities’ recommendations (OECD, World Bank, and IMF, 2007). Further research exploring Corporate Governance (CG) relationships and differences between large and small firms might be helpful.

The relevance of risk aversion as the key factor explaining the fluctuations of the economy is receiving increasing attention since the Great Recession. The role of financial shocks in the economic fluctuations and their associated amplifying effects are crucial aspects in the monetary policies followed by central banks around the world. The underlying mechanism behind these effects is directly linked to the time-varying behavior of risk aversion, especially during recessions. The reason is that risk aversion is strongly related to the behavior of the expected market risk premium, which is a fundamental input in the cost of capital and investment decisions of firms through the business cycle. In this research, we present an analysis of the interplay between the expected market risk premium, time-varying risk aversion, and economic uncertainty for the Spanish economy. We estimate risk aversion from aggregate consumption of Spanish households, while the expected market risk premium is extracted from options traded on the IBEX-35 index. Note that we put together variables from the real economy and financial markets. We show that both variables are positive and significantly related, clarifying the important connection between the real and financial sectors of the Spanish economy. More precisely, we show that both risk aversion and the expected market risk premia at alternative horizons are counter-cyclical, and that the slope of the term structure of the expected market risk premium is steeply downward sloping during recessions. Moreover, we find that risk aversion significantly amplifies the effects of adverse economic uncertainty shocks on the expected market risk premium. Therefore, it should not be surprising the collapse of financial prices when there is shock in uncertainty amplified by the increase in risk aversion. The corresponding rise in the expected market risk premium explains the drop in equity prices during bad economic times. The persistence of these effects depends on the nature of the economic crisis. In this framework, we understand both the initial dramatic drop in asset prices provoked by the exogenous COVID-19 crises, and the subsequent recuperation. To conclude, the positive association between uncertainty shocks, risk aversion and the expected market risk premium has extremely important consequences for the investment and output growth fluctuations of the Spanish economy.

In this paper, we explore two of the most relevant theories that explain financial policy in small and medium enterprises (SMEs): pecking order theory and trade-off theory. Panel data methodology is used to test the empirical hypotheses over a sample of 6482 Spanish SMEs during the five-year period 1994–1998. The results suggest that both theoretical approaches contribute to explain capital structure in SMEs. However, while we find evidence that SMEs attempt to achieve a target or optimum leverage (trade-off model), there is less support for the view that SMEs adjust their leverage level to their financing requirements (pecking order model).

Our evidence suggests that Spanish public firms adjust slowly toward their capital structure target, with the typical firm closing approximately one-fifth of the gap between its current and target debt ratios each year. This finding is in contrast with previous evidence; however, we employ econometric techniques specially designed for highly persistent dependent variables, like market debt ratios. Moreover, our evidence does not seem to indicate that macroeconomic conditions, at least under the conditions experienced by the Spanish economy during our sample period, affect the speed of adjustment. If anything, our results are consistent with faster adjustments during economic states in which the distance between the current and target leverage is the greatest.