Abstract:
Using an international dataset, we find that firms in countries with languages that lack a clear distinction between present and future tenses, leading to weaker future time references, are more likely to adopt negative net debt. This conservative and non-standard financing policy is notably pronounced among financially constrained firms, those with weaker governance, and those operating in highly competitive industries. Interestingly, this increase in negative net debt with weak-FTR is higher in countries with more established institutions, financial systems, and legal frameworks, which typically exhibit a lower prevalence of financial conservatism and a weaker influence of informal institutions on corporate decisions.
Description:
DATA AVAILABILITY :
The firm-level datasets that support the empirical findings of this study are available from Thomson Reuters Datastream. Restrictions may apply to the availability of these datasets, which were used under license. Macroeconomic data is publicly available from the World Bank. Data for indicators of financial development and institutional quality is available from the IMF and previous studies.
