|
EconStor >
Stockholm School of Economics >
EFI - The Economic Research Institute, Stockholm School of Economics >
SSE/EFI Working Paper Series in Economics and Finance, EFI - The Economic Research Institute, Stockholm School of Economics >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/56155
|
| | |
| Title: | | The Euro is good after all: Corporate evidence  |
| Authors: | | Bris, Arturo Koskinen, Yrjö |
| Issue Date: | | 2002 |
| Series/Report no.: | | SSE/EFI Working Paper Series in Economics and Finance 510 |
| Abstract: | | In this paper we study the changes in corporate valuation, investments, and financing choices induced by the formation of Economic and Monetary Union (EMU) in Europe. We use corporate-level data from ten countries that adopted the euro, the three EU countries that did not join EMU, as well as Norway and Switzerland. We show that the introduction of the euro has increased valuations for large firms in EMU countries, especially in countries that had experienced currency crises. Firm values have also increased for firms that were previously exposed to currency risks irrespective of size. Investments have increased for all firms, but the effects are bigger for large firms and for firms coming from countries with experiences of currency depreciations. The increase in investments has been financed mainly via debt issues. The evidence provided here supports the view that the introduction of the euro has lowered firms' cost of capital by eliminating currency risks among the countries that have adopted the common currency, and by further increasing capital market integration in Europe. |
| Subjects: | | Economic and Monetary Union (EMU) the euro valuation investment debt equity cost of capital currency risk |
| JEL: | | F33 F36 G32 |
| Document Type: | | Working Paper |
| Appears in Collections: | | SSE/EFI Working Paper Series in Economics and Finance, EFI - The Economic Research Institute, Stockholm School of Economics
|
| |
| | |
Download bibliographical data as:
BibTeX
|
| |
Share on:http://hdl.handle.net/10419/56155
|
Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.
|