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31 juillet 2021
- handle: 10670/1.tqe3z6
- hal: hal-03945894
- doi: 10.1080/1351847X.2021.1955463
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info:eu-repo/semantics/altIdentifier/doi/10.1080/1351847X.2021.1955463
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Mots-clés
Corporate investment WACC Cost of equity Debt Privately held firms G - Financial Economics/G.G3 - Corporate Finance and Governance/G.G3.G31 - Capital Budgeting • Fixed Investment and Inventory Studies • Capacity G - Financial Economics/G.G3 - Corporate Finance and Governance/G.G3.G32 - Financing Policy • Financial Risk and Risk Management • Capital and Ownership Structure • Value of Firms • GoodwillSujets proches
Businesses Firms Companies Enterprises Business organizations Organizations, BusinessCiter ce document
Juan Carluccio et al., « Private Firms, Corporate Investment and the WACC: Evidence from France », Archive ouverte de Sciences Po (SPIRE), ID : 10.1080/1351847X.2021.1955463
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Résumé
How is corporate investment affected by the weighted average cost of capital (WACC)? Since existing studies focus on listed firms, little is known of the case of private firms, in spite of their relevance in both developed and developing economies. In this paper, we attempt to fill this gap. We develop an empirical study on the impact of the WACC on private firms' investment rates. We exploit accounting information on a panel of around 1700 French private corporate groups in the non-farm, non-financial sectors, covering the period 2005–2015. We overcome the challenge posed by the lack of observable information about the cost of equity for private firms by developing a methodology that relies on estimates for comparable public firms. We find that a one-standard deviation increase in the WACC (2 percentage points) leads to a 0.7 percentage point decrease in the investment rate the following year. Increases in both components of the WACC, namely the cost of debt and the cost of equity, are associated with lower investment rates. A back-of-the-envelope calculation suggests that the heightened WACC following the euro area crises reduced the aggregate corporate investment rate of French private firms by a cumulative 1.6 percentage points over 2009–2015.