Corporate Financing in the Deleveraging Era

Our analysis is focused on understanding the financing behavior of the Italian firms in a period characterized by a relevant economic crisis and consequently by the deleveraging. We aim to detect the determinants of Italian firms leverage choices in a deleverage period and whether firms’ financing behavior agrees with the predictions of PO or with those of TO. We take into account the most important determinants already found in literature for the independent variables’ choice to control for the factors which could simultaneously influence leverage. We use a wide, longitudinal micro dataset of the Italian National Statistical Institute from 2008 to 2015 and a GMM approach. Two GMM were estimated: one for all sample and the other for manufacturing only. The model indicates that the firms’ capital structure choices is in according to Trade-Off theory rather than Pecking Order one. This evidence is stronger for manufacturing. However, these last results may be biased by the introduction of a policy provision such as ACE; that fostered self-financing. We applied a panel econometric model to a very large sample of firms involving all industry of an economic system. We explore the firms’ behavior in a period characterize by a deleveraging tendency.