TY - BOOK ID - 84873716 TI - Financial Decisions and Investment Outcomes in Developing Countries : The Role of Institutions PY - 2015 SN - 1498331750 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Economic development KW - Developing countries KW - Economic policy. KW - Economic conditions. KW - Exports and Imports KW - Labor KW - Public Finance KW - Taxation KW - International Financial Markets KW - Financing Policy KW - Financial Risk and Risk Management KW - Capital and Ownership Structure KW - Value of Firms KW - Goodwill KW - Economic Development: Financial Markets KW - Saving and Capital Investment KW - Corporate Finance and Governance KW - Taxation, Subsidies, and Revenue: General KW - International Lending and Debt Problems KW - Wages, Compensation, and Labor Costs: General KW - Public finance & taxation KW - International economics KW - Labour KW - income economics KW - Legal support in revenue administration KW - Debt financing KW - Average effective tax rate KW - Wages KW - Income tax systems KW - Revenue administration KW - External debt KW - Tax policy KW - Taxes KW - Revenue KW - Debts, External KW - Tax administration and procedure KW - Income tax KW - India UR - https://www.unicat.be/uniCat?func=search&query=sysid:84873716 AB - This paper analyzes how differences in legal origin, judicial efficiency, and investor protection affect firm leverage and earnings volatility across developing countries. Using a large number of developing countries, four main findings are highlighted. First, firms in civil legal origin countries rely more on debt financing compared to firms in common law countries, and they exhibit lower earnings volatility. Second, under weak judicial enforcement, firms tend to borrow more but they take less risk. Third, stronger creditor rights increase debt financing and reduce earnings volatility. Fourth, firm listing on a developed stock exchange shifts the capital structure towards more equity financing, and it increases the firm’s ability to borrow more when the judicial system is inefficient. The results reinforce the importance of strengthening laws and institutions as well as deepening capital markets in developing countries to improve financing conditions and investment outcomes. ER -