Debt–performance relationship and firms' international trade activities
ISSN: 0307-4358
Article publication date: 6 October 2020
Issue publication date: 16 March 2021
Abstract
Purpose
This study examines the influence of firm's international trade activities on the relationship between debt and firm's performance.
Design/methodology/approach
This study is based on a sample of 8,343 Portuguese manufacturing firms between 2010 and 2017 and resorts to a random effects model.
Findings
Results suggest that international engagement can have a moderating effect on the relationship between debt and a company's performance. In fact, results indicate that the impact of debt on performance is less negative for companies involved in international trade activities (either importing, exporting or both) than for purely domestic firms. Furthermore, results also suggest that the level of international involvement is relevant; importing activities are those that contribute most toward a positive impact.
Originality/value
The work extends the existing literature by considering various types of international trade activities.
Keywords
Acknowledgements
Funding: This research has been financed by the European Regional Development Fund through COMPETE 2020 – Programa Operacional Competitividade e Internacionalização (POCI) and by Portuguese public funds through FCT (Fundação para a Ciência e a Tecnologia) in the framework of the project POCI-01-0145-FEDER-006890.
Citation
Forte, R. and Botelho, A. (2021), "Debt–performance relationship and firms' international trade activities", Managerial Finance, Vol. 47 No. 4, pp. 487-505. https://doi.org/10.1108/MF-04-2020-0162
Publisher
:Emerald Publishing Limited
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