Dr. Ortenca Kume from Kent Business School presented a paper titled “Impact of Financial Crisis on Capital Structure of UK Firms” at the 20th Annual Conference of Multinational Finance Society (MFS) held in Izmir, Turkey between 30th June and 2nd July 2013.
The conference’s aim was to bring together academic researchers, educators, doctoral students and practitioners from various international institutions to focus on timely financial issues and research findings pertaining to industrialized and developing countries including the recent financial and economic crisis. Keynote speakers included Prof. Suleyman Basak (London Business School, UK) and Prof. Luigi Zingales ( University of Chicago, USA)
Dr. Ortenca Kume presented a paper “Impact of Financial Crisis on Capital Structure of UK Firms”
World economies experienced a major financial and banking crisis during the first decade of 21st century. Our study examines the impact of this financial crisis on capital structure decision of UK industrial firms. Results show that firms first increase their leverage ratios from pre-crisis (2006 and 2007) to crisis (2008 and 2009) years and then decrease it in the post-crisis (2010 and 2011) years. Firms use both debt and equity to manage their capital structure however they rely more heavily on short term debt rather than long term debt during the crisis years. Our results also reveal that firm with lower than industrial average capital structure ratio in the pre-crisis years gradually increase their leverage during crisis and post-crisis years. However, firms withhigher than industrial average capital structure ratios in the pre-crisis years steadily decrease their leverage by improving their equity levels.