DETERMINANTS OF THE COST OF DEBT IN THE REPUBLIC OF SERBIA/ДЕТЕРМИНАНТЕ ЦЕНЕ ДУГА У РЕПУБЛИЦИ СРБИЈИ
Abstract
This study explores the determinants of the cost of corporate debt in the Republic of Serbia. It covers 4,701 companies during 2008-2013, representing more than 90% of all medium-sized and large companies actively operating in the country. In this particular market, the cost of corporate debt is influenced by the following factors: Euribor rates, sector membership, size of a company, short-term and total leverage of a company, interest coverage ratio, the presence of the shareholder capital, ownership structure as pertaining to the state or foreign ownership, and the type of audit opinion. After accounting for these factors, the pseudo R2 (the correlation between the predicted and the actual values of the cost of debt) yields 77%. At the same time, the type of an audit opinion is shown to be the single most important predictor of the cost of debt in the country, contributing to the pseudo R2 with approximately 2,900 basis points. Therefore, companies operating in the Republic of Serbia seeking a more affordable cost of debt should pay special attention to the quality of their financial reports.
Keywords: Cost of Debt, Republic of Serbia, Audit Opinion, Financial Leverage, Ownership Structure.
Ова студија истражује детерминанте цене дуга на примеру Републике Србије. Узорком је обухваћено 4701 средње и велико привредно друштво које је активно пословало у периоду од 2008. до 2013. године, што чини више од 90% одговарајуће популације. Резултати показују да, на посматраном тржишту, утицај на висину цене дуга имају следећи фактори: Еурибор каматна стопа, секторска класификација, величина друштва, степен краткорочне и дугорочне задужености, коефицијент покрића камате, правна форма, власничка структура и врста ревизорског мишљења. Након узимања у обзир свих наведених фактора, псеудо R2 достиже вредност од 77%. Такође, врста ревизорског мишљења показала се као најзначајнија детерминанта цене дуга, доприносећи вредности псеудо R2 са приближно 29 процентних поена. Друштва која послују у Републици Србији би, према томе, требало да обрате посебну пажњу на квалитет финансијског извештавања.
Кључне речи: цена дуга, Република Србија, ревизорско мишљење, задуженост, власничка структура.
Keywords
Full Text:
PDF (Cрпски)References
Ahmed, A. S., Billings, B. K., Morton, R. M., & Stanford-Harris, M. (2002). The role of accounting conservatism in mitigating bondholder-shareholder conflicts over dividend policy and in reducing debt costs. Accounting Review, 77, 867–890. doi:10.2308/accr.2002.77.4.867
Anderson, R., Mansi, S., & Reeb, D. (2003). Founding family ownership and the agency cost of debt. Journal of Financial Economics. Retrieved from http://www.sciencedirect.com/science/article/pii/S0304405X03000679
Anderson, R., Mansi, S., & Reeb, D. (2004). Board characteristics, accounting report integrity, and the cost of debt. Journal of Accounting and Economics, 3 (3), 315-342. doi:10.1016/j.jacceco.2004.01.004
Arena, M. P., & Dewally, M. (2012). Firm location and corporate debt. Journal of Banking and Finance, 36, 1079–1092. doi:10.1016/j.jbankfin.2011.11.003
Aslan, H., & Kumar, P. (2012). Strategic Ownership Structure and the Cost of Debt. Review of Financial Studies, 25(7), 2257–2299. doi:10.1093/rfs/hhs062
Bharath, S. T., Sunder, J., & Sunder, S. V. (2004). Accounting Quality and Debt Contracting. Retrieved from http://www8.gsb.columbia.edu/rtfiles/accounting/sunder.shyam.pdf
Binsbergen, V., & Jules, H. (2010). The cost of debt. The Journal of Finance. Retrieved from http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6261.2010.01611.x/full
Bliss, M. & Gul, F. (2012). Political connection and cost of debt: Some Malaysian evidence. Journal of Banking and Finance.6 (5), 1520-1527, doi:10.1016/j.jbankfin.2011.12.011
Borisova, G., & Megginson, W. L. (2011). Does Government Ownership Affect the Cost of Debt? Evidence from Privatization. Review of Financial Studies, 24(8), 2693–2737. doi:10.1093/rfs/hhq154
Boubakri, N., Cosset, J.-C., & Saffar, W. (2013). The role of state and foreign owners in corporate risk-taking: Evidence from privatization. Journal of Financial Economics, 108(3), 641–658. doi:10.1016/j.jfineco.2012.12.007
Boubakri, N., & Ghouma, H. (2010). Control/ownership structure, creditor rights protection, and the cost of debt financing: International evidence. Journal of Banking & Finance, 34(10), 2481–2499. doi:10.1016/j.jbankfin.2010.04.006
Cerovic, S., Stanisic, N., Radojevic, T., & Radovic, N. (2015). The Impact of Ownership Structure on Corporate Performance in Transitional Economies. Amfiteatru Economic, 17(38), 441–454.
Chan, A. L. C., & Hsu, A. W. (2013). Corporate pyramids, conservatism and cost of debt: Evidence from Taiwan. International Journal of Accounting, 48, 390–413. doi:10.1016/j.intacc.2013.07.001
Chen, C., & Zhu, S. (2013). Financial reporting quality, debt maturity, and the cost of Debt: Evidence from China. Emerging Markets Finance and Trade, 49, 236–253. doi:10.2753/REE1540-496X4905S416
Chen, D, (2012) Classified boards, the cost of debt, and firm performance. Journal of Banking and Finance. 36 (12), 3346‒3365, doi:10.1016/j.jbankfin.2012.07.015
Chuluun, T., Prevost, A. K., & Puthenpurackal, J. (2010). Board Networks and the Cost of Corporate Debt. SSRN Electronic Journal. doi:10.2139/ssrn.1573333
Francis, J., LaFond, R., Olsson, P., & Schipper, K. (2005). The market pricing of accruals quality. Journal of Accounting and Economics, 39(2), 295–327. doi:10.1016/j.jacceco.2004.06.003
Fernandez, P. (2004). The value of tax shields is not equal to the present value of tax shields. Journal of Financial Economics, 73(1), 145–165. doi:10.1016/j.jfineco.2002.10.001
Heck, R., Thomas, S., & Tabata, L. (2013). Multilevel and longitudinal modelling with IBM SPSS. (G. A. Marcoulides, Ed.) (2nd ed.). New York, London: Routledge.
Kabir, R., Li, H., & Veld-Merkoulova, Y. V. (2013). Executive compensation and the cost of debt. Journal of Banking and Finance, 37, 2893–2907. doi:10.1016/j.jbankfin.2013.04.020
Karjalainen, J. (2011). Audit quality and cost of debt capital for private firms: Evidence from Finland. International Journal of Auditing, 15, 88–108. doi:10.1111/j.1099-1123.2010.00424.x
Lai, K. W. (2011). The cost of debt when all-equity firms raise finance: The role of investment opportunities, audit quality and debt maturity. Journal of Banking and Finance, 35, 1931–1940. doi:10.1016/j.jbankfin.2011.01.007
Lorca, C., Sánchez-Ballesta, J. P., & García-Meca, E. (2011). Board Effectiveness and Cost of Debt. Journal of Business Ethics, 100, 613–631. doi:10.1007/s10551-010-0699-3
Mansi, S. A., &Reeb, D. M. (2002). Corporate International Activity and Debt Financing. Journal of International Business Studies. doi:10.1057/palgrave.jibs.8491008
Nadauld, T. &Weisbach, M. (2012). Did securitization affect the cost of debt? Journal of Financial Economics. 105 (2), 332‒352. doi:10.1016/j.jfineco.2012.03.002
National Bank of Serbia (2015). Macroeconomic Developments in Serbia. 1-20. Retrieved from http://www.nbs.rs/export/sites/default/internet/english/18/18_3/presentation_invest.pdf
Paige Fields, L., Fraser, D. R., & Subrahmanyam, A. (2012). Board quality and the cost of debt capital: The case of bank loans. Journal of Banking and Finance, 36, 1536–1547. doi:10.1016/j.jbankfin.2011.12.016
Piot, C., &Missonier-Piera, F. (2007). Corporate governance, audit quality and the cost of debt financing of French listed companies. In Communication présentée au 28ème Congrès de l’Association Francophone de Comptabilité. Poitiers. Retrieved from http://www.researchgate.net/profile/Charles_Piot/publication/228618891_Corporate_governance_audit_quality_and_the_cost_of_debt_financing_of_French_listed_companies/links/02e7e524951dd88d91000000.pdf
Pittman, J. A., & Fortin, S. (2004). Auditor choice and the cost of debt capital for newly public firms. Journal of Accounting and Economics, 37(1), 113–136. doi:10.1016/j.jacceco.2003.06.005
Prevost, A. K., Rao, R. P., & Skousen, C. J. (2008). Earnings Management and the Cost of Debt. SSRN Electronic Journal. doi:10.2139/ssrn.1083808
Rahaman, M. M., & Zaman, A. Al. (2013). Management quality and the cost of debt: Does management matter to lenders? Journal of Banking and Finance, 37, 854–874. doi:10.1016/j.jbankfin.2012.10.011
Sánchez-Ballesta, J. P., & García-Meca, E. (2011).Ownership Structure and the Cost of Debt. European Accounting Review, 20(2), 389–416.doi:10.1080/09638180903487834
Sengupta, P. (1998). Corporate disclosure quality and the cost of debt. Accounting Review, 73, 459–474.doi:10.2307/248186
Shailer, G. &Wang, K. (2014) Government ownership and the cost of debt for Chinese listed corporations. Emerging Markets Review, 22, 1‒17, doi:10.1016/j.ememar.2014.11.002
Shen, C. H., & Huang, Y. L. (2013). Effects of earnings management on bank cost of debt. Accounting and Finance, 53, 265–300. doi:10.1111/j.1467-629X.2011.00455.x
United Nations. (2008). International Standard Industrial Classification of All Economic Activities, Rev.4. New York. Retrieved from http://unstats.un.org/unsd/cr/registry/regcst.asp?Cl=27
Valta, P. (2012). Competition and the cost of debt. Journal of Financial Economics, 105(3), 661–682. doi:10.1016/j.jfineco.2012.04.004
Waisman, M. Ye, P. &Zhun, Y. (2015). The effect of political uncertainty on the cost of corporate debt. Journal of Financial Stability, 16, 106‒117, doi:10.1016/j.jfs.2015.01.002
World Bank (2015). World Bank Group - Serbia Partnership Program Snapshot. 1‒44. Retrieved from https://www.worldbank.org/content/dam/Worldbank/document/eca/Serbia-Snapshot.pdf
Refbacks
- There are currently no refbacks.
© University of Niš, Serbia
Creative Commons licence CC BY-NC-ND
Print ISSN: 0353-7919
Online ISSN: 1820-7804