Thaku , Oli Ahad; Ma emilola Bolaji Tunde; Bany A i in Bin Amin Noo din; Alam,
Md. Kausa ; P abowo, M. Agung
A icle
The ela ionship be ween goodwill and capi al
s uc u e and he mode a ing e ec o inancial ma ke
de elopmen
Jou nal o Economics, Finance and Adminis a i e Science
P o ided in Coope a ion wi h:
Uni e sidad ESAN, Lima
Sugges ed Ci a ion: Thaku , Oli Ahad; Ma emilola Bolaji Tunde; Bany A i in Bin Amin Noo din; Alam,
Md. Kausa ; P abowo, M. Agung (2024) : The ela ionship be ween goodwill and capi al s uc u e
and he mode a ing e ec o inancial ma ke de elopmen , Jou nal o Economics, Finance and
Adminis a i e Science, ISSN 2218-0648, Eme ald Publishing Limi ed, Bingley, Vol. 29, Iss. 57, pp.
121-145,
h ps://doi.o g/10.1108/JEFAS-04-2022-0107
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The ela ionship be ween goodwill
and capi al s uc u e and he
mode a ing e ec o inancial
ma ke de elopmen
Oli Ahad Thaku
Depa men o Business Adminis a ion, In e na ional S anda d Uni e si y,
Dhaka, Bangladesh
Ma emilola Bolaji Tunde and Bany-A i in Amin Noo din
Uni e si i Pu a Malaysia, Se dang, Malaysia
Md. Kausa Alam
B ac Business School, B ac Uni e si y, Dhaka, Bangladesh, and
Muhammad Agung P abowo
Facul y o Economics and Business, Uni e si as Sebelas Ma e , Su aka a, Indonesia
Abs ac
Pu pose –This s udy empi ically in es iga es he ela ionship be ween goodwill asse s and capi al s uc u e
(i.e. deb a io) o i ms and he mode a ing e ec o inancial ma ke de elopmen on he ela ionship be ween
goodwill asse s and capi al s uc u e.
Design/me hodology/app oach –This esea ch applied a quan i a i e me hod. The a icle collec s la ge
samples o lis ed i ms om 23 de eloping and nine de eloped coun ies and applied he panel da a echniques.
This esea ch used i m-le el da a om he Da aS eam da abase o bo h de eloped and de eloping coun ies.
The s udy uses 4,912 i m-le el da a om 23 de eloping coun ies and 4,303 i m-le el da a om nine
de eloped coun ies.
Findings –The indings e eal a signi ican posi i e ela ionship be ween goodwill asse s and capi al
s uc u e in de eloping coun ies, bu goodwill asse s ha e a signi ican nega i e ela ionship wi h capi al
s uc u e in de eloped coun ies. Mo eo e , inancial ma ke de elopmen posi i ely mode a es he
ela ionship be ween goodwill asse s and he capi al s uc u e o i ms in de eloping coun ies. The esul s
in o m i m manage s ha goodwill asse s se e as addi ional colla e al o secu e deb inancing. Mo eo e ,
policymake s should o mula e a deb ma ke policy ha ecognizes goodwill asse s as addi ional colla e al o
he pu pose o ob aining deb capi al.
Resea ch limi a ions/implica ions –The s udy has se e al implica ions. Fi s , goodwill asse s a e
iden i ied as a ac o o capi al s uc u e in his s udy. Fixed asse s ha e been iden i ied as one o he d i e s o
capi al s uc u e in p e ious esea ch, al hough goodwill asse s a e seldom included. Second, his a icle shows
ha along wi h demand-side de e minan s, supply-side de e minan s also play an impo an ole in e ms o he
Financial
ma ke
de elopmen
121
JEL Classi ica ion —G32, C33, C52
© Oli Ahad Thaku , Ma emilola Bolaji Tunde, Bany-A i in Amin Noo din, Md. Kausa Alam and
Muhammad Agung P abowo. Published in Jou nal o Economics, Finance and Adminis a i e Science.
Published by Eme ald Publishing Limi ed. This a icle is published unde he C ea i e Commons
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o g/licences/by/4.0/legalcode
Since submission o his a icle, he ollowing au ho (s) ha e upda ed hei a ilia ions: Oli Ahad
Thaku is a he Sou heas Business School, Sou heas Uni e si y, Dhaka, Bangladesh.
Da a a ailabili y s a emen : The da a ha suppo he indings o his s udy a e a ailable om he
co esponding au ho upon easonable eques .
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The cu en issue and ull ex a chi e o his jou nal is a ailable on Eme ald Insigh a :
h ps://www.eme ald.com/insigh /2077-1886.h m
Recei ed 26 Ap il 2022
Re ised 6 Feb ua y 2023
18 Sep embe 2023
Accep ed 30 Oc obe 2023
Jou nal o Economics, Finance and
Adminis a i e Science
Vol. 29 No. 57, 2024
pp. 121-145
Eme ald Publishing Limi ed
2077-1886
DOI 10.1108/JEFAS-04-2022-0107
i ms’choice abou he capi al s uc u e. The e o e, i ms should ake bo h he demand-side and supply-side
ac o s in o conside a ion when sou cing o ex e nal inancing (i.e. deb capi al).
O iginali y/ alue –The s udy conside ed goodwill as a componen o capi al s uc u e. The s udy analysis
includes a la ge sample o en e p ises, including 4,912 big i ms om 23 de eloping coun ies and 4,303 la ge
i ms om nine indus ialized o de eloped coun ies, which adds o he cu en capi al s uc u e in o ma ion.
Fu he mo e, a la ge sample size inc eases he esul s’ obus ness and gene alizabili y.
Keywo ds Capi al s uc u e, Goodwill, In o ma ion asymme y, Financial ma ke de elopmen ,
Panel da a analysis
Pape ype Resea ch pape
1. In oduc ion
Fi ms ha e been wo king ha de h oughou he ime o aise hei goodwill asse s in o de o
p oduce ma ke alue ha is g ea e han he book alue o hei asse s (Widnyana e al.,
2020). Keeping an eye on goodwill is ac ually i al because i ep esen s he sum o money
paid beyond he asse s’book alue (Widnyana e al., 2020). Al hough he loss o goodwill
gene ally lowe s he i m alue, goodwill loss can occasionally indica e o e spending and
ca eless spending. Lende s o money- o-businesses a e awa e o his issue and may hink
abou including goodwill when lending bo owed inancing o businesses. Howe e , he e is
no much esea ch ha can con i m whe he aising goodwill asse s is a wise decision.
Capi al s uc u e which is he mix u e o deb and equi y o inance i ms’ope a ions has
been ex ensi ely esea ched, bu he undamen al ques ion aised by Mye s (1984),“how do
i ms choose hei capi al s uc u e o wha a e he p ecise de e minan s o capi al s uc u e?”–
emains a puzzle o da e (DeAngelo, 2022). Howe e , esea che s ha e made an a emp o
answe his ques ion in se e al ways. Fi s ly, Mye s (1984) de eloped a e sion o he ade-o
and pecking o de heo ies and Bake and Wu gle (2002) es ablished he ma ke iming heo y
o answe his ques ion and o m he heo e ical basis o explain capi al s uc u e de e minan s.
Secondly, Guizani (2020) and F ank and Goyal (2009) and o he ea lie esea che s, used he
abo e heo ies and conduc ed empi ical s udies which iden i ied some i m-speci ic ac o s like
i m size, p o i abili y, g ow h oppo uni y, non-deb ax-shield and ixed asse s as
de e minan s o capi al s uc u e bu hese s udies excluded goodwill asse s as de e minan s
o capi al s uc u e.
In a closely ela ed empi ical s udy, Ma emilola and Ahmad (2015) ocused on he goodwill
asse s as de e minan o capi al s uc u e bu hey used only 100 lis ed i ms om Sou h A ican
coun ies. In ano he ela ed pape , Cha e jee e al. (2022) ocused on he alue- ele ance o
goodwill asse s and hey ind ha in he pos -pe iod, i ms ha include goodwill in hei deb
ag eemen s seems o enjoy inc ease deb and alue. Mo eo e , Çam and
€
Oze (2022) and Acedo-
Ram
ı ez and Ruiz-Cabes e (2014) iden i ied inancial ma ke de elopmen –a supply-side
de e minan o capi al s uc u e, which migh indi ec ly a ec he ela ionship be ween capi al
s uc u e and goodwill asse s and his is o e looked in he capi al s uc u e li e a u e.
In oday’s in angible asse -d i en economies, goodwill asse s a e also iewed as an in iguing
esea ch opic. They a e signi ican in bo h de eloped and de eloping na ions wi h
unde de eloped capi al ma ke s ha a e ca ching up o de eloped na ions in e ms o inancial
ma ke de elopmen . This s udy o e s a chance o ad ance ou unde s anding o goodwill asse s
and how inancial ma ke g ow h modi ies he ela ionship be ween goodwill asse s and capi al
s uc u e because goodwill asse s a e ema kably unde s udied (Thaku e al., 2020).
The s udy has h ee impo an con ibu ions: i s , goodwill asse s a e iden i ied as a
ac o o capi al s uc u e in his s udy. Fixed asse s ha e been iden i ied as one o he d i e s
o capi al s uc u e in p e ious esea ch, al hough goodwill asse s a e seldom included.
Second, his a icle shows ha along wi h demand-side de e minan s, supply-side
de e minan s also play an impo an ole in e ms o he i ms’choice abou he capi al
s uc u e. The e o e, i ms should ake bo h he demand side and supply-side ac o s in o
JEFAS
29,57
122
conside a ion when sou cing o ex e nal inancing (i.e. deb capi al). Finally, his analysis
includes a la ge sample o en e p ises, including 4,912 big i ms om 23 de eloping coun ies
and 4,303 la ge i ms om nine de eloped coun ies. Fu he mo e, a la ge sample size
inc eases obus ness and gene aliza ion o he esul s.
Ou esul s show ha goodwill asse s a e connec ed o he capi al s uc u e o i ms in
de eloping coun ies in a majo and p oduc i e way. Howe e , i is bo h posi i ely and
ad e sely connec ed o he capi al s uc u e o i ms in de eloped coun ies. These di ec
e ec esul s o de eloping coun ies sugges ha ma ke s in de eloping coun ies a e
conside ing goodwill as colla e alizable asse s along wi h ixed asse s. Mo eo e , we ound
e idence ha inancial ma ke de elopmen posi i ely mode a es he ela ionship be ween
goodwill asse s and he capi al s uc u e o i ms in de eloping coun ies. Equally, mos o he
supply-side de e minan s signi ican ly impac he capi al s uc u e o i ms in bo h
de eloping and de eloped coun ies. Thus, we conclude ha he capi al s uc u e choice o
i ms is a ec ed by bo h he demand-side de e minan s and supply-side de e minan s such as
inancial ma ke de elopmen , in la ion a e, he g ow h a e in g oss domes ic p oduc (GDP)
and in e es a e.
2. Li e a u e e iew
2.1 Theo e ical amewo k
Azad e al. (2014) heo ize ha inancial ma ke de elopmen in less de eloped and
de eloping economies appea s ine icien . I he inancial ma ke is ine icien , bo h inside s
and ou side s o a i m will ha e unequal in o ma ion. In o he wo ds, he e will be
asymme y o in o ma ion (Chak abo y, 2010). P io s udies (e.g. Sha ma, 2017;Wu gle ,
2000) also show ha inancial ma ke de elopmen has a s ong link wi h he le el o
asymme y in he ma ke , which ul ima ely a ec s he supply and alloca ion o capi al.
Wu gle (2000) indings e eal ha he inancial ma ke ’s deg ee o de elopmen is a o ably
ela ed o an imp o ed alloca ion o capi al.
Mo eo e , Cha e jee e al. (2022) and Hul en and Hao (2008) ha e shown ha goodwill is
ecognized in he ma ke , bu i has no adequa e accoun ing ecogni ion. Also, i ms a e
eluc an o sha e in o ma ion on ac i i ies which gene a e he alue o goodwill in he
ma ke , and i may lead o loss o compe i i e ad an age. As a esul , goodwill asse s su e
om in o ma ion asymme y p oblems. Howe e , as he inancial ma ke de elops,
in o ma ion asymme y educes and ecogni ion o goodwill asse s as colla e al o secu e
deb capi al inc eases (Thaku e al., 2020). This easoning explains why inancial ma ke
de elopmen posi i ely mode a es he ela ionship be ween goodwill asse s and i ms’
capi al s uc u e.
2.2 Demand-side de e minan s o capi al s uc u e
Capi al s uc u e is usually p oxy as he a io o o al deb o o al asse s because emphasis is
placed on he deb componen o he capi al s uc u e. The de e minan s o capi al s uc u e
emain a puzzle o da e e en a e o e 60 yea s o esea ch on capi al s uc u e (DeAngelo,
2022). The majo i y o capi al s uc u e esea ch (e.g. Jawo ski and San os, 2022;Touil and
Mamoghli, 2020;Bilgin and Dinc, 2019;Ma emilola and Ahmad, 2015) has concen a ed on
i m-speci ic a iables o de e minan s. They a e also called demand-side de e minan s as
hey con ol he i ms’demand o ex e nal unds. This s udy has conduc ed a li e a u e
su ey (see Table 1) co e ing he a icles published in he las 10 yea s. Based on ou
li e a u e sea ch (Table 1), he s udy ound some co e i m-speci ic ac o s, which a e i m
size, ixed asse s, p o i abili y and g ow h oppo uni ies. Employing me a- eg ession
analysis and co e ing he esul s o 100 ecen ly published a icles, Hang e al. (2018) ound
Financial
ma ke
de elopmen
123
S udy
Sample
pe iod
Coun y o
s udy
Dependen
a iable
Independen /Con ol a iables
Sz P Tg G FR IL Lq Id TR NDTS EFC Ag
MC
GDP GDPG INF
F ank and
Goyal (2009)
1950–2003 USA TDTAM þ
a
a
þ
a
a
þ
a
þ
a
Vo and Ellis
(2017)
2006–2015 Vie nam LDTA þ
b
þþ
a
þþ
Kh
emi i and
Noubbigh
(2018)
2006–2016 5 Sub-Saha an
coun ies
LDTA þ
a
a
þ
a
a
a
a
þ
a
a
þ
a
a
þ
a
a
a
þ
a
Chak aba i
and
Chak aba i
(2019)
2006–07 o
2016–17
India TDTA þ
a
þ
b
a
Je mias and
Yigi (2019)
1989–2012 Tu key TDTA þ
a
a
a
b
þ
a
Ha on (2018) 2000–2014 Indonesia TDTA
a
b
þ
a
þ
b
a
M’ng e al.
(2017)
2004–2013 3 Asian
coun ies
TDC þ
a
a
þ
a
a
þa
Al es and
Fe ei a
(2011)
1991–2001 31 coun ies
a
a
a
þ
a
Ma emilola
e al. (2019)
2008–2012 Malaysia TDTA þ
a
þ
a
þ
a
a
a
Bilgin and
Dinc (2019)
2012–2017 Tu key TDTC þ
a
c
þ
b
þ
a
a
þþ
Rajan and
Zingales
(1998)
1987–1990 G7 coun ies –þ
a
a
þ
a
a
Ha ison
and Wisnu
Widjaja
(2014)
2004–2011 USA LTD þ
a
þ
a
a
c
AlNajja
and
Hussainey
(2011)
1991–2002 UK TDC* þ
c
c
c
c
þ
Acedo-
Ram
ı ez and
Ruiz-
Cabes e
(2014)
1998–2008 5 Eu opean TDTA þ
a
þ
a
Ma emilola
and Ahmad
(2015)
2004–2009 Sou h A ica TDTA*
a
þ
b
S udy
Independen /Con ol a iables
INT OWS ATR DSC Ig SPP OC U IdD IdC LS CR SR EFWA ME F FDC In CF GA
F ank and Goyal (2009)
Vo and Ellis (2017)
Kh
emi i and Noubbigh
(2018)
þ
a
a
Chak aba i and
Chak aba i (2019)
a
Je mias and Yigi (2019)
Ha on (2018)
b
b
a
b
M’ng e al. (2017)
Al es and Fe ei a (2011)
a
þ
a
a
Ma emilola e al. (2019) þ
b
Bilgin and Dinc (2019) þa
Rajan and Zingales (1998)
(con inued)
Table 1.
Re iew o pas s udies
on de e minan s o
capi al s uc u e
JEFAS
29,57
124
h ee majo capi al s uc u e de e minan s, which a e ixed asse s, g ow h and p o i abili y.
Applying simila echniques and da a collec ion s a egies, Kuma e al. (2017) ound a
sligh ly longe lis o de e minan s, which a e, p o i abili y, ixed asse s, size, i m age,
g ow h oppo uni ies, liquidi y, non-deb ax shield and isk. Howe e , he na u e o he
ela ionship and he le el o signi icance a e no consis en among hese li e a u e su eys
and wi hin he esul s o de eloped and de eloping coun ies.
Focusing on goodwill asse s and ixed asse s as a demand side ac o , Ma emilola and
Ahmad (2015) applied he ade-o heo y o in es iga e he impac o goodwill asse s and
ixed asse s on deb a ios o Sou h A ican i ms om 2004 o 2009. They ound ha
goodwill asse s and ixed asse s inc ease deb a ios o i ms in Sou h A ica and concluded
ha goodwill asse s se e as addi ional colla e al o secu e deb capi al in Sou h A ica.
Unlike Ma emilola and Ahmad (2015) which ocused on a single coun y and used 100 lis ed
i ms, ou s udy ocuses on he impac o goodwill asse s on deb a ios using 4,912 lis ed
i ms om 23 de eloping coun ies and 4,303 lis ed i ms om nine de eloped coun ies.
Recen ly, Cha e jee e al. (2022) applied he deb con ac ing heo y and disco e ed ha o
businesses ha include goodwill in deb ag eemen s in he pos -new law pe iod, he alue-
ele ance o goodwill is highe . Addi ionally, hey disco e ha companies ha include
goodwill in hei deb a angemen s seem o bene i om inc eased deb and alue in he
pos -pe iod.
The i s hypo hesis o his s udy in al e na i e o m is:
H1. Goodwill asse s ha e a signi ican posi i e impac on he capi al s uc u e (deb a io)
o i ms in de eloping and de eloped coun ies.
2.3 Supply-side de e minan s o capi al s uc u e
Along wi h he ac o s which a ec he demand o he deb capi al o a i m, some supply-
side conside a ions may also help o de e mine a company’s capi al s uc u e. Howe e ,
s udies on he supply-side de e minan s a e less common compa ed o he s udies on i m-
speci ic o demand-side de e minan s. Among he ew s udies a e (Demi guç-Kun and
Maksimo ic, 1999;De Jong e al., 2008;Fan e al., 2012;Acedo-Ram
ı ez and Ruiz-Cabes e,
2014;Mc Nama a e al., 2017;Thaku e al., 2020,2022,2023;Hen ique e al., 2021). They ha e
conside ed supply-side ac o s and ha e mos ly looked a he di ec link be ween supply-side
S udy
Independen /Con ol a iables
INT OWS ATR DSC Ig SPP OC U IdD IdC LS CR SR EFWA ME F FDC In CF GA
Ha ison and Wisnu
Widjaja (2014)
AlNajja and Hussainey
(2011)
Acedo-Ram
ı ez and Ruiz-
Cabes e (2014)
b
þ
c
a
Ma emilola and Ahmad
(2015)
þ þ
b
No e(s): SZ5Fi m size, P 5P o i abili y, Tg 5Tangibili y, FR5Fi m isk, IL5Indus y le e age, Lq 5Liquidi y, TR5Tax a e,
NDTS5Non-deb ax shield, EFC 5Ex e nal inancing cos , Ag5Fi m age, MCGDP 5Ma ke capi aliza ion o GDP(Capi al Ma ke
De elopmen ), GDPG 5GDP g ow h a e, INF5In la ion Ra e, INT5In e es a e, OWS5Owne ship s uc u e, ATR5Asse u no e
a io, DSC 5Deb se ice capaci y, Ig 5In angibili y, SPP5Sha e p ice pe o mance, OC5Owne ship concen a ion, U 5Muni icence,
IdD 5Indus y dynamism, IdC5Indus y concen a ion, LS 5Legal sys em, CR5C edi o s’Righ , SR5Sha eholde s’Righ ,
EFWA 5Ex e nal Finance Weigh ed A e age M/B, ME 5Manage s’Expe ience, F 5Fac o ing, FDC5Financial dis ess cos ,
In 5In es men , CF5Cash low, GA 5Goodwill asse s. TDTA 5To al deb o o al asse s, LDTA 5Long e m deb o o al asse s,
TDC 5To al deb o o al capi al, LTD 5Long e m deb , TDTAM 5To al deb o o al asse based on ma ke alues. a, b and c
ep esen le el o signi icance a 1, 5 and 10%, espec i ely
Sou ce(s): Table by Thaku Table 1.
Financial
ma ke
de elopmen
125
ac o s and capi al s uc u e. Following ha , Demi guç-Kun and Maksimo ic (1999)
a emp ed o in es iga e he e ec o supply-side de e minan s on he ma u i y o deb used
by en e p ises in bo h de eloped and de eloping na ions. Resul s o hei s udy show ha (1)
in con as o he gene al expec a ion, in coun ies whe e equi y ma ke s a e mo e de eloped,
la ge i ms ha e highe deb a ios, (2) size o he banking sec o in a coun y does no ha e a
signi ican impac on he deb a ios o la ge i ms in ha coun y and (3) i ms in de eloped
as well as de eloping coun ies signi ican ly di e in e ms o hei use o long- e m deb .
This s udy sugges s ha ac o s such as s ock ma ke and banking sec o de elopmen s,
legal sys ems and deg ee o go e nmen subsidies a e esponsible o ela i ely lowe use o
deb by i ms in de eloping coun ies.
Subsequen ly, Fan e al. (2012), aking a sample om many coun ies (39) and co e ing
bo h de eloped and de eloping economies, showed ha mo e in luence has he
mac oeconomic ac o s on a i m’s capi al s uc u e han indus y- ela ed ac o s. This
s udy examined a wide ange o ins i u ional ac o s, some o which we e no aken in o
conside a ion by p e ious esea che s. This s udy ound ha a coun y’s le el o
co up ion, i s legal sys em and ax codes and he p e e ences o he supplie s o he und
ha e a emendous impac on he i ms’capi al s uc u e and deb ma u i y choice. La e ,
Acedo-Ram
ı ez and Ruiz-Cabes e (2014) ied o examine how supply-side
de e minan s o capi al s uc u e a ec i ms’deb a ios h ough company-speci ic
ac o s. Taking a sample om i e majo Eu opean coun ies and applying GMM
echnique, his s udy showed ha signi ican di e ences exis in he deb a ios o i ms
ac oss hese coun ies. Like De Jong e al. (2008), his s udy also p o ides e idence ha
supply-side ac o s ha e an indi ec e ec on he in e ela ionship be ween deb a ios
and i m-speci ic ac o s.
One o he ecen s udies, An zoula os e al. (2016), ied o ind ou he impac o inancial
de elopmen on he deb a ios o i ms. This s udy is unique in e ms o he analy ical
me hod used. While using he da a con e gence echnique, his s udy showed ha mos o he
i ms con e ged in e ms o he deb a io, and his con e gence is a ec ed by inancial
de elopmen . Howe e , hey also ound ano he con e gen g oup whose deb a ios a e no
a ec ed by inancial de elopmen since i ms in his g oup do no ha e adequa e access o
capi al ma ke s. Mos o he s udies e iewed he e show ha supply-side ac o s ha e a
signi ican impac on i ms’deb a ios o capi al s uc u e. Supply-side ac o s include
capi al ma ke de elopmen , he legal sys em, GDP g ow h, c edi o s’p o ec ion, legal
en o cemen , in e es a e and in la ion a e.
2.4 Financial ma ke de elopmen , in o ma ion asymme y and supply o capi al (deb )
Recen s udies (e.g. Ojah and Ka eme a, 1999;Azad e al., 2014) on capi al ma ke
de elopmen show ha capi al ma ke s in less de eloped and de eloping economies a e
ine icien . I he capi al ma ke is e icien , bo h inside s and ou side s o a company will
ha e he same in o ma ion; in o he wo ds, he e will be no asymme y o in o ma ion
(Chak abo y, 2010). Pas s udies also show ha capi al ma ke de elopmen , one o he
supply-side ac o s, has a s ong connec ion wi h he le el o asymme y in he ma ke , which
ul ima ely a ec s he supply and alloca ion o capi al.
One o he e y ea ly s udies, Ake lo (1970), has shed ligh on he in o ma ion asymme y
p oblem. He sugges ed ha asymme y in in o ma ion in he capi al ma ke can se iously a ec
i s smoo h unc ioning and in ex eme cases, i may e en lead o a b eakdown. A e wa d, Su i
(2007) using 12,672 USA syndica ed loan da a shows e idence ha in o ma ion asymme y in
he syndica ed loan ma ke a ec s he composi ion o he membe s o a syndica e and he
s uc u e o i . The esul s sugges ha in o ma ion asymme y has a signi ican impac on he
channeling o unds om sa e s o ul ima e in es o s. Finally, Pang and Wu (2009) explo ed a
JEFAS
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126
pa icula channel h ough which inance s imula es g ow h, i.e. capi al alloca ion. While using
in e na ional indus ial da a, his s udy inds ha coun ies, whe e he capi al ma ke is
de eloped, a ac mo e unds.
Acco ding o Sha ma (2017), a high le el o in o ma ion asymme ies s ill exis s in he
c edi ma ke s, which c ea es oppo uni ies o he bo owe o ac immo ally. This isk o
immo al beha io can esul in undesi able ma ke ou comes, such as poo esou ce
alloca ion and ma ke ailu e (Ake lo , 1970;A akan and Ekmekci, 2014). Pas s udies (e.g.
Black e al., 2000;Hul en and Hao, 2008) ha e shown ha goodwill is ecognized in he ma ke ,
bu i has no adequa e accoun ing ecogni ion. Also, companies a e eluc an o sha e
in o ma ion on ac i i ies o condi ions (such as R&D, de elopmen o human capi al,
imp o ed p ocess and loyal cus ome base), which gene a e he alue o goodwill in he
ma ke as sha ing ha in o ma ion may lead o loss o compe i i e ad an age and u he ,
he e is no egula o y equi emen o disclose ha in o ma ion. Due o hese easons, goodwill
asse s and ac o s leading o he gene a ion o i , bo h su e om in o ma ion asymme y
p oblems. Despi e hese cha ac e is ics, i a highe le el o ma ke e iciency exis s in he
inancial ma ke , his in o ma ion asymme y p oblem may be educed. As he inancial
ma ke de elops, in o ma ion asymme y educes and ecogni ion o goodwill asse s as
colla e al o secu e deb capi al inc eases. The e o e, inancial ma ke de elopmen should
posi i ely mode a e he ela ionship be ween goodwill asse s and i ms’capi al s uc u e.
The s udy’s second al e na e hypo hesis is he ollowing:
H2. Financial ma ke de elopmen mode a es he ela ionship be ween goodwill asse s
and capi al s uc u e (deb a io) o i ms in de eloping and de eloped coun ies.
Goodwill Asse s
(Independen Va iable) Capi al S uc u e [Deb a io]
(Dependen Va iable)
Financial Ma ke De elopmen
(Mode a ing Va iable)
Con ol Va iables:
Sales, Ma ke o book a io,
Tangible Asse s (PPE),
Dep ecia ion, EBIT, Payou
a io, Fi m-Age, G ow h a e
o GDP, In la ion
3. Me hod
3.1 Da a
This esea ch used wo da a se s: i s , he i m-le el da a om he Da aS eam da abase o
de eloped coun ies and a a ime o de eloping coun ies. In o al, he i m-le el da a we e
collec ed om 23 de eloping coun ies and nine de eloped coun ies. Bangladesh, B azil,
Chile, Egyp , Ghana, Kenya, Malaysia, Mau i ius, Mexico, Mo occo, Nige ia, Pakis an, Pe u,
he Philippines, Poland, Sou h A ica, S i Lanka, Thailand, Tunisia and Tu key a e among
he de eloping na ions. Canada, Denma k, F ance, Ge many, I aly, he Ne he lands,
Singapo e, Sou h Ko ea and he UK make up he de eloped coun ies. The 23 de eloping
coun ies selec ed ha e unc ioning inancial ma ke s, whe e o ces o demand de e mine he
p ices o inancial asse s. Mo eo e , he nine de eloped coun ies selec ed ha e s ong
unc ioning inancial ma ke s and a e mos ly used in he capi al s uc u e li e a u e
(An oniou e al., 2008;Ma emilola e al., 2019). A o al o 4,912 and 4,303 exchange-lis ed i ms
we e selec ed om he de eloping and de eloped coun ies, espec i ely. To a oid he impac
o he 2008 inancial c isis, he s a ing yea o da a collec ion was 2010 and co e ed up o he
la es a ailable yea 2018. A e he inal sc eening p ocess, his s udy succeeded in ha ing a
balanced panel o 9,212 i ms o he de eloped coun ies and de eloping coun ies o e nine
Financial
ma ke
de elopmen
127
yea s. Two sou ces o mac oeconomic in o ma ion we e used o compile he s a is ics: he
Wo ld Bank’s open da abase and he IMF’s Wo ld Economic Ou look da a.
As in p e ious s udies (e.g. Gaud e al., 2005) on capi al s uc u e, we excluded
inancial i ms such as a bank, insu ance and leasing i ms as hey ha e qui e di e en
inancing pa e ns om he non inancial i ms. Mo eo e , he s udy excluded bo h
inancial and u ili y i ms om ou sample because hey a e highly egula ed and exhibi
a di e en pa e n o capi al s uc u e om he es o he i ms. Fu he , he i ms wi h
missing alues du ing he s udy pe iod we e excluded. Thus, he o al inal sample o
his s udy was 9,215 i ms om 32 coun ies. The selec ion o coun ies was based on da a
a ailabili y and he p esence o well- unc ioning capi al ma ke s ha de e mine he
p ices o inancial asse s. The sample size o he s udy is su icien ly la ge o bo h he
de eloping and de eloped coun ies as he e a e o e 4,000 i ms in each ca ego y.
Speci ically, a o al numbe o 4,912 lis ed i ms om de eloping coun ies a e used while
a o al o 4,303 lis ed i ms a e used om de eloped coun ies. S a a so wa e is used o
analyze he da a.
3.2 Econome ic model
To examine he impac o goodwill asse s on capi al s uc u e and he mode a ing e ec o
banking sec o de elopmen on he ela ionship be ween capi al s uc u e and goodwill
asse s, he ollowing wo models we e un. Equa ion (1) and (2) a e he ixed-e ec models as
in Je mias and Yigi (2019). Howe e , using he ixed-e ec model is no au oma ic. The
Hausman es is used o choose be ween he ixed-e ec model and he andom-e ec model
(Luo, 2015).
TDTAij ¼β1þβ2LEVTAij þβ3LSLij þβ4MTBij þβ5PPETAij
þβ6DEPTAij þβ7EBITAij þβ8Fageij þβ9PORij þβ10GDPGj
þβ11INFj þβ12INTj þβ13MCGDPj þ
η
iþ
α
þ
μ
ij
(1)
TDTAij ¼β1þβ2LEVTAij þβ3PCDBMj þβ4ðLEVTA*PCDBMÞij þβ5LSLij
þβ6MTBij þβ7PPETAij þβ8DEPTAij þβ9EBITAij þβ10Fageij þβ11PORij
þβ12GDPGj þβ13INFj þβ14INTj þ
η
iþ
α
þ
μ
ij
(2)
whe e:
TDTA 5To al deb o o al asse s a io;
LEVTA 5Excess o en e p ise alue o e o al asse s;
LSL 5Log o sales;
MTB 5Ma ke - o-book a io;
PPETA 5P ope y, plan and equipmen , scaled by o al asse s;
DEPTA 5Dep ecia ion o o al asse s;
EBITA 5Ea nings be o e in e es and ax scaled by o al asse s;
FAge 5Cu en yea minus yea o es ablishmen ;
POR 5Payou a io;
GPDG 5G ow h a e o GDP (%);
JEFAS
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128
he da a om indus ialized coun ies using he indings o he B eusch and Pagan
Lag angian Mul iplie (LM) es . Because he esul s jus i y he adop ion o a andom-e ec
model a he han a pooled OLS and he es p- alues a e less han 0.01. Fo g ea e ce ain y,
we de e mined whe he o use a ixed-e ec model o a andom-e ec model using he
Hausman Tes s on bo h da ase s. Addi ionally, a ixed-e ec model appea s o be su icien
acco ding o he Hausman Tes s. The issue o he e oscedas ici y and se ial co ela ion in he
da ase s was disco e ed using he Modi ied Wald es o g oup-wise he e oscedas ici y and
he Woold idge es o au oco ela ion once mo e. The esul s o hese es s show bo h
au oco ela ion and he e oscedas ici y. So, using pooled OLS wi h he e oscedas ici y and
se ial co ela ion adjus ed s anda d e o , he ou h model was c ea ed (OLSHSCSE).
The eg ession analyses (Tables 8 and 9) based on da a om de eloping and de eloped
coun ies e eal ha goodwill (LEVTA) has a conside able posi i e in luence in all ou models
as a demand-side p edic o . Some con ol a iables, such as business size, asse angibili y,
p o i abili y and di idend payou a io, a e ema kably cons an ac oss models and da ase s.
O he a iables p oduce inconsis encies in ou comes, ei he among models o ac oss da ase s.
Howe e , in bo h eme ging and es ablished coun ies, he bulk o he a iables ha e a s ong
link wi h deb a io. P i a e C edi by Deposi Money Bank (PCDBM): Resul s based on he
de eloping coun ies’da a show ha inancial ma ke de elopmen measu ed by p i a e c edi
by deposi money bank as a pe cen age o GDP has a signi ican posi i e impac (excep in RE
model) on deb a io. Howe e , in he de eloped coun ies’sample, PCDBM has signi ican
nega i e impac on deb a io (excep in he FE model).
4.3.2 Mode a ing impac o inancial ma ke de elopmen on he ela ionship be ween
goodwill-asse s and capi al s uc u e. The ixed-e ec (FE) model’s ou pu (Table 10, Column 4)
based on samples om eme ging coun ies demons a es ha he de elopmen o inancial
ma ke s signi ican ly modi ies he link be ween goodwill asse s and i ms’deb a ios. In
o he wo ds, he de elopmen o he inancial indus y a ec s he e ec o goodwill asse s on
deb a io in he sample o eme ging coun ies. The g ow h o he inancial ma ke s has a
sizable mode a ing in luence on he ela ionship be ween goodwill asse s and i ms’deb
a io, acco ding o he o dina y leas squa es (OLS) wi h he e oscedas ici y and se ial
co ela ion adjus ed. While he OLS wi h he e oscedas ici y and se ial co ela ion co ec ed
esul s show ha inancial ma ke de elopmen has an insigni ican mode a ing e ec on
deb a io in he sample o de eloped coun ies, he esul s o he ixed-e ec model show
ha he ela ionship be ween goodwill asse s and i ms’deb a io is nega i ely mode a ed by
he de elopmen o inancial ma ke s. This sugges s ha he impac o goodwill asse s on
i ms’deb a io is uncondi ional on he inancial ma ke .
5. Discussion o esul s
The indings indica e ha deb a ios in de eloping na ions a e posi i ely co ela ed wi h he
g ow h o inancial ma ke s. In con as , he g ow h o he inancial ma ke s has li le bea ing
on he deb le els o weal hy na ions. Ma emilola e al. (2019) demons a e a a o able impac
o inancial ma ke g ow h on deb a ios o en e p ises in de eloping na ions, which is
consis en wi h he indings o de eloping coun ies. Deb a ios o businesses a e impac ed
by he g ow h o inancial ma ke s because inancing me hods h ough banks o s ock
ma ke s sui he go e nance s uc u e in ha hose indi iduals ecei e he g ea es abili y o
in luence business s a egies and a e also he la ges capi al supplie s (Ma emilola e al., 2019;
Fan e al., 2012). As inancial ma ke s (i.e. he banking sec o ) expand, bo owing cos s decline
and businesses a e mo e inclined o aise deb h ough banks, which esul s in a ise in deb
consump ion. The esul s a e in line wi h An oniou e al. (2008) indings ha mac oeconomic
ac o s and whe he i ms ope a e in bank-based economies o capi al-based economies a ec
hei deb inancing decisions. An oniou e al. (2008) no e ha empi ical s udies gene ally
Financial
ma ke
de elopmen
135
ocus on he i m speci ic ac o s o demand side ac o s ha inancial manage s should
conside when making deb inancing decisions bu o e look he possible implica ions o
mac oeconomic ac o s ha may a ec he choice o deb inancing mix.
Mo eo e , as sugges ed by pas esea che s (Ojah and Ka eme a, 1999;Azad e al., 2014),
ine iciencies s ill exis in he inancial ma ke s o de eloping coun ies. Due o his
ine iciency in he de eloping ma ke s, he e is s ill oom o imp o emen and hus, u he
Va iables
(Pooled
OLS) (RE) (FE)
(OLS wi h he e o
and se ial co .)
Two-s ep
sys em GMM
TDTA TDTA TDTA TDTA TDTA
L.TDTA 0.736***
(0.012)
LEVTA (Excess o en e p ise
alue o e o al asse s)
0.479*** 0.551*** 0.637*** 0.579** 0.638***
(0.111) (0.10) (0.109) (0.284) (0.107)
PCDBM (P i a e c edi by
deposi money bank as % o
GDP)
0.024*** 0.006 0.074*** 0.024*** 0.075***
(0.004) (0.007) (0.014) (0.009) (0.012)
LSL (Log o sales) 2.780*** 1.782*** 1.273*** 2.780*** 1.275***
(0.067) (0.098) (0.120) (0.179) (0.118)
MTB (Ma ke - o-book a io) 0.181*** 0.176*** 0.184*** 0.181* 0.185***
(0.048) (0.037) (0.038) (0.109) (0.037)
PPETA (P ope y, plan and
equipmen , ne , scaled by o al
asse s)
15.550*** 15.310*** 14.990*** 15.550*** 14.992***
(0.430) (0.533) (0.602) (1.084) (0.599)
DEPTA (Dep ecia ion o o al
asse s)
7.080** 1.012 0.852 7.080 0.853
(3.536) (3.043) (3.144) (7.747) (3.139)
EBITA (Ea nings be o e
in e es and ax o o al asse s)
47.200*** 26.530*** 23.520*** 47.200*** 23.518***
(1.165) (0.885) (0.904) (3.431) (0.899)
Fage (Yea o es ablishmen ) 0.052*** 0.048*** 0.081*** 0.052*** 0.083***
(0.004) (0.009) (0.016) (0.011) (0.013)
POR (Payou a io) 0.137*** 0.073*** 0.060*** 0.137*** 0.061***
(0.004) (0.003) (0.003) (0.008) (0.001)
GDPG (G ow h a e o GDP) 0.485*** 0.075** 0.115*** 0.485*** 0.117***
(0.041) (0.035) (0.039) (0.077) (0.034)
INF (In la ion a e) 0.369*** 0.252*** 0.236*** 0.369*** 0.239***
(0.029) (0.020) (0.021) (0.047) (0.019)
INT (Banks’lending a e) 0.294*** 0.104*** 0.0368 0.294*** 0.039
(0.015) (0.024) (0.032) (0.035) (0.028)
Cons an 1.014 11.120*** 12.940*** 1.014 12.938**
(0.716) (1.032) (1.292) (1.700) (1.290)
Obse a ions 43,866 43,866 43,866 43,866 43,866
R-squa ed 0.163 0.052 0.163
Numbe o id 4,906 4,906
B eusch–Pagan LM es (0.000)
Hausman es (0.000)
Mul icollinea i y (VIF) 1.25
He e oscedas ici y (
χ
2
s a ) (0.000)
Se ial co ela ion (F-s a ) (0.000)
AR (2) 0.235
Hansen es 0.493
No e(s): (a) See Table 1 o he de ini ion o a iables and measu emen s. As e isks indica e signi icance a 1
(***), 5 (**) and 10% (*)
(b) The s anda d e o s a e epo ed in pa en heses
Sou ce(s): Table by Thaku and modi ied by Ma emilola
Table 8.
Reg ession esul s
based on 4,912
non inancial lis ed
i ms om 23
de eloping coun ies
JEFAS
29,57
136
de elopmen in he inancial ma ke has he scope o enhance he impac o goodwill asse s on
i ms’deb a io. Con e sely, inancial ma ke s in he de eloped coun ies a e much mo e
e icien compa ed o he de eloping coun ies’coun e pa s (Bas e al., 2009). In addi ion, due
o a o able p ope y igh s (Claessens and Lae en, 2003) and be e p o ec ion o c edi o s’
igh s (Gianne i, 2003), he colla e izabili y o in angible asse s (goodwill asse s) is mo e
(Pooled
OLS) (RE) (FE)
(OLS wi h he e o
and se ial co .)
Two-s ep
Sys em
GMM
Va iables TDTA TDTA TDTA TDTA TDTA
L.TDTA 0.639***
(0.009)
LEVTA (Excess o en e p ise
alue o e o al asse s)
2.865*** 1.614*** 1.447*** 2.865*** 1.450***
(0.110) (0.095) (0.100) (0.198) (0.099)
PCDBM (P i a e c edi by
deposi money bank as % o
GDP)
0.056*** 0.022*** 0.011** 0.056*** 0.012**
(0.003) (0.003) (0.005) (0.007) (0.003)
LSL (Log o sales) 2.080*** 1.896*** 2.257*** 2.080*** 2.260***
(0.051) (0.082) (0.117) (0.117) (0.115)
MTB (Ma ke - o-book a io) 0.323*** 0.0157 0.0597 0.323*** 0.0600**
(0.045) (0.035) (0.036) (0.094) (0.006)
PPETA (P ope y, plan and
equipmen , ne , scaled by o al
asse s)
19.930*** 18.310*** 17.550*** 19.930*** 17.552***
(0.426) (0.535) (0.612) (1.121) (0.609)
DEPTA (Dep ecia ion o o al
asse s)
4.498 6.483*** 9.134*** 4.498 9.136***
(2.795) (2.365) (2.444) (5.794) (2.439)
EBITA (Ea nings be o e
in e es and ax o o al asse s)
11.580*** 9.992*** 10.040*** 11.580*** 9.041***
(0.581) (0.433) (0.442) (1.094) (0.438)
Fage (Yea o es ablishmen ) 0.006 0.005 0.095*** 0.006 0.096***
(0.004) (0.009) (0.034) (0.008) (0.029)
POR (Payou a io) 0.053*** 0.038*** 0.035*** 0.053*** 0.037***
(0.004) (0.003) (0.004) (0.008) (0.002)
GDPG (G ow h a e o GDP) 0.547*** 0.308*** 0.135*** 0.547*** 0.137***
(0.054) (0.036) (0.039) (0.074) (0.032)
INF (In la ion a e) 0.137* 0.028 0.159*** 0.137 0.161***
(0.083) (0.053) (0.057) (0.092) (0.053)
INT (Banks’lending a e) 0.182*** 0.496*** 1.544*** 0.182 1.545***
(0.057) (0.082) (0.119) (0.127) (0.114)
Cons an 13.680*** 7.553*** 2.512* 13.680*** 2.514*
(0.525) (0.780) (1.308) (1.173) (1.301)
Obse a ions 38,075 38,075 38,075 38,075 38,075
R-squa ed 0.142 0.062 0.142
Numbe o id 4,297 4,297
B eusch–Pagan LM es (0.000)
Hausman es (0.000)
Mul icollinea i y (VIF) 1.50
He e oscedas ici y (
χ
2
s a ) (0.000)
Se ial co ela ion (F-s a ) (0.000)
AR (2) 0.219
Hansen es 0.382
No e(s): (a) See Table 1 o he de ini ion o a iables and measu emen s. As e isks indica e signi icance a
1% (***), 5% (**) and 10% (*)
(b)The s anda d e o s a e epo ed in pa en heses
Sou ce(s): Table by Thaku and modi ied by Ma emilola
Table 9.
Reg ession esul s
based on 4,303
non inancial lis ed
companies om 9
de eloped coun ies
Financial
ma ke
de elopmen
137
es ablished in he de eloped ma ke s. Thus, he e is a li le abso p ion o he inancial ma ke
de elopmen e ec on he goodwill-capi al s uc u e ela ionship in he de eloped coun ies.
This easoning explains why goodwill has insigni ican mode a ing impac on he
ela ionship be ween goodwill asse s and i ms’deb a ios in de eloped coun ies.
(Pooled OLS) (RE) (FE)
(OLS wi h he e o
and se ial co )
Two-s ep
sys em GMM
Va iables TDTA TDTA TDTA TDTA TDTA
L.TDTA 0.725**^
(0.007)
LEVTA (Excess o en e p ise
alue o e o al asse s)
1.538*** 0.308 0.481** 1.538*** 0.482**
(0.221) (0.226) (0.241) (0.525) (0.237)
PCDBM (P i a e c edi o
deposi money bank as % o
GDP)
0.034*** 0.009 0.074*** 0.034*** 0.076***
(0.004) (0.007) (0.014) (0.009) (0.010)
LEVTAPCDBM
(LEVTA*PCDBM)
0.0387*** 0.012*** 0.006* 0.039*** 0.029***
(0.004) (0.004) (0.004) (0.008) (0.004)
LSL (Log o sales) 2.771*** 1.770*** 1.265*** 2.771*** 1.264***
(0.067) (0.099) (0.120) (0.178) (0.116)
MTB (Ma ke - o-book a io) 0.162*** 0.176*** 0.184*** 0.162 0.187***
(0.048) (0.037) (0.038) (0.108) (0.031)
PPETA (P ope y, plan and
equipmen , ne , scaled by o al
asse s)
15.490*** 15.300*** 14.990*** 15.490*** 14.991***
(0.429) (0.533) (0.602) (1.083) (0.598)
DEPTA (Dep ecia ion o o al
asse s)
7.048** 0.797 0.727 7.048 0.727
(3.532) (3.044) (3.144) (7.707) (3.144)
EBITA (Ea nings be o e
in e es and ax scaled by o al
asse s)
47.430*** 26.530*** 23.510*** 47.430*** 23.499***
(1.163) (0.885) (0.904) (3.413) (0.899)
Fage (Yea o es ablishmen ) 0.050*** 0.048*** 0.080*** 0.050*** 0.083***
(0.004) (0.009) (0.016) (0.011) (0.009)
POR (Payou a io, in %) 0.139*** 0.074*** 0.060*** 0.139*** 0.059***
(0.004) (0.003) (0.003) (0.008) (0.005)
GDPG (G ow h a e o GDP, in
%)
0.501*** 0.069** 0.113*** 0.501*** 0.109***
(0.041) (0.035) (0.039) (0.077) (0.029)
INF (In la ion a e, in %) 0.355*** 0.250*** 0.236*** 0.355*** 0.234***
(0.029) (0.020) (0.021) (0.047) (0.018)
INT (Banks’lending a e, in %) 0.296*** 0.105*** 0.036 0.296*** 0.042^
(0.015) (0.024) (0.032) (0.036) (0.023)
Cons an 0.628 11.030*** 12.900*** 0.628 12.903***
(0.717) (1.031) (1.292) (1.705) (1.288)
Obse a ions 43,866 43,866 43,866 43,866 43,866
R-squa ed 0.165 0.052 0.165
Numbe o id 4,906 4,906
B eusch–Pagan LM es
(p- alue)
0.000
Hausman es (p- alue) 0.000
Mul icollinea i y (mean VIF) 2.05
He e oscedas ici y es (p- alue) 0.000
F-s a is ics (p- alue) 0.000
AR (2) 0.316
Hansen es 0.471
No e(s): (a) See Table 2 o he de ini ion o a iables and measu emen s. As e isks indica e signi icance a
1% (***), 5% (**) and 10% (*)
(b) The s anda d e o s a e epo ed in pa en hesis
Sou ce(s): Table by Thaku and modi ied by Ma emilola
Table 10.
Reg ession esul s
(mode a ing e ec ),
based on 4,912 non-
inancial lis ed
companies om 23
de eloping coun ies
JEFAS
29,57
138
Besides, demand side ac o s such as PPETA (p ope y, plan and equipmen o o al asse s),
LSL (log o sales), ea nings be o e in e es and ax o o al asse s (EBITA), ma ke - o-book a io
(MTB), i m age, pay-ou a io and dep ecia ion o o al asse s (DEPTA) consis en ly p edic
deb a ios in bo h he de eloped and de eloping coun ies. These ou comes align wi h he
ou comes o Hen ique e al. (2021) and Kuma e al. (2017) who epo ed EBITA, PPETA, LSL,
i m age, MTB and DEPTA, as de e minan s o i ms’deb a ios in de eloping and de eloped
coun ies. The indings o Hang e al. (2018), who ound PPETA, MTB and EBITA as d i e s o
en e p ises’deb a ios, a e also suppo ed by hese da a.
In bo h he eme ging and de eloped coun ies, he bulk o he a iables ha e a s ong link
wi h deb a io. These esul s a e consis en wi h he indings o Ma emilola and Ahmad
(2015), who epo ed posi i e impac o goodwill asse s on capi al s uc u e o Sou h A ican
i ms. These esul s a e consis en wi h he indings o Ma emilola e al. (2019) and Jawo ski
and San os (2022) who epo ed ha i m size, asse angibili y, p o i abili y and di idend
payou a io a e consis en de e minan s o deb a io. In he de eloping coun ies’ esul s, he
p i a e c edi by deposi money bank a iable e eal ha inancial ma ke de elopmen
posi i ely impac he deb a io, excep in andom-e ec s model. These esul s a e consis en
wi h he indings o Çam and
€
Oze (2022) and Ma emilola e al. (2019), who also epo ed ha
inancial ma ke de elopmen has posi i e impac on deb a io. Bu , in he de eloped
coun ies’sample, inancial ma ke de elopmen signi ican ly and nega i ely impac s he
deb a io (excep in he FE model). This esul is consis en wi h he indings o Kh
emi i and
Noubbigh (2018), who epo ed nega i e impac o inancial ma ke de elopmen on deb
a io o i ms.
5.1 Theo e ical implica ions
Azad e al. (2014) heo ize ha inancial ma ke de elopmen in less de eloped and
de eloping economies appea ine icien because he p oblem o in o ma ion asymme y
exis s. Ou esul s ha inancial ma ke de elopmen posi i ely mode a es he link be ween
goodwill asse s and i ms’deb capi al a io in de eloping coun ies con ibu e o he
li e a u e ha a gues ha inancial ma ke de elopmen is s ongly linked o he le el o
in o ma ion asymme y in he ma ke s which ul ima ely in luence he supply and alloca ion
o capi al (Sha ma, 2017). The inancial ma ke de elopmen lowe s he in o ma ion
asymme y p oblem inhe en in goodwill asse s and imp o es i as colla e al o secu e deb
capi al. Mo eo e , ou esul s ha goodwill asse s a e posi i ely ela ed o i ms’deb capi al
a io in he de eloping and de eloped coun ies ex ends he ade-o heo y o capi al
s uc u e, which adi ionally iden i ies ixed asse s as one o he majo ac o s ha suppo
i ms’abili y o secu e deb capi al om c edi o s. In o he wo ds, we in oduced goodwill
asse s as an added ac o o he adi ional ac o s iden i ied by he ade-o heo y o capi al
s uc u e.
5.2 Policy and manage ial implica ions
The indings o his esea ch ha e policy implica ions. Fi s ly, he esul s in o m i m-
manage s ha a he han ocusing on only ixed asse s as colla e al, goodwill asse s also
se e as addi ional colla e al o secu e deb inancing. The i m manage s ha ha e goodwill
asse s would bene i while o mula ing he inancing policies o hei i ms. Second, c edi o s
in he de eloped and de eloping ma ke s will be mo e awa e o he colla e izabili y o
goodwill asse s as hey make decisions o p o ide c edi s o i ms. Thi d, esul s on he
impac o supply-side de e minan s on he capi al s uc u e will aid policymake s in bo h he
de eloping and de eloped coun ies o design and implemen mac oeconomic policies o
enhance he inancing and in es men decisions o i ms. Finally, he s udy disco e ed ha
he expansion o inancial ma ke s has a mode a ing e ec on he link be ween goodwill
Financial
ma ke
de elopmen
139
asse s and i ms’deb a ios which would help policymake s in de eloping coun ies o
imp o e he colla e izabili y o goodwill asse s h ough enhancing he inancial ma ke
condi ion in hose coun ies and easing access o deb capi al (see Table 11).
(Pooled
OLS) (RE) (FE)
(OLS wi h he e o
and se ial co )
Two-s ep
sys em GMM
Va iables TDTA TDTA TDTA TDTA TDTA
L.TDTA 0.624***
(0.006)
LEVTA (Excess o en e p ise
alue o e o al asse s)
2.207*** 2.024*** 2.133*** 2.207*** 2.134***
(0.409) (0.332) (0.342) (0.693) (0.336)
PCDBM (P i a e c edi o
deposi money bank as % o
GDP)
0.055*** 0.022*** 0.011** 0.055*** 0.012**
(0.003) (0.004) (0.005) (0.007) (0.003)
LEVTAPCDBM
(LEVTA*PCDBM)
0.005* 0.003 0.006** 0.005 0.005**
(0.003) (0.003) (0.003) (0.006) (0.001)
LSL (Log o sales) 2.080*** 1.893*** 2.253*** 2.080*** 2.255***
(0.051) (0.082) (0.117) (0.117) (0.114)
MTB (Ma ke - o-book a io) 0.326*** 0.017 0.063* 0.326*** 0.064**
(0.047) (0.036) (0.036) (0.094) (0.031)
PPETA (P ope y, plan and
equipmen , ne , scaled by o al
asse s)
19.940*** 18.300*** 17.550*** 19.940*** 17.549***
(0.426) (0.535) (0.612) (1.121) (0.598)
DEPTA (Dep ecia ion o o al
asse s)
4.465 6.488*** 9.153*** 4.465 9.155***
(2.795) (2.365) (2.444) (5.795) (2.403)
EBITA (Ea nings be o e in e es
and ax scaled by o al asse s)
11.610*** 9.982*** 10.030*** 11.610*** 10.029***
(0.582) (0.434) (0.442) (1.095) (0.425)
Fage (Yea o es ablishmen ) 0.006* 0.005 0.095*** 0.006 0.096***
(0.004) (0.010) (0.034) (0.008) (0.028)
POR (Payou a io, in %) 0.053*** 0.038*** 0.035*** 0.053*** 0.034***
(0.004) (0.003) (0.004) (0.008) (0.003)
GDPG (G ow h a e o GDP, in
%)
0.546*** 0.308*** 0.134*** 0.546*** 0.136***
(0.054) (0.036) (0.039) (0.074) (0.035)
INF (In la ion a e, in %) 0.152* 0.021 0.150*** 0.152* 0.148***
(0.083) (0.053) (0.057) (0.092) (0.050)
INT (Banks’lending a e, in %) 0.180*** 0.502*** 1.565*** 0.180 1.566***
(0.057) (0.082) (0.120) (0.127) (0.118)
Cons an 13.630*** 7.602*** 2.499* 13.630*** 2.598**
(0.526) (0.781) (1.308) (1.181) (1.239)
Obse a ions 38,075 38,075 38,075 38,075 38,075
R-squa ed 0.142 0.062 0.142
Numbe o id 4,297 4,297 4,297
B eusch-Pagan LM es (p- alue) 0.000
Hausman es (p- alue) 3.040
Mul icollinea i y (mean VIF) 0.000
He e oscedas ici y es (p- alue) 0.000
F-s a is ics (p- alue) 0.000
AR (2) 0.207
Hansen es 0.377
No e(s): (a) See Table 2 o he de ini ion o a iables and measu emen s. As e isks indica e signi icance a 1
(***), 5 (**) and 10% (*)
(b) The s anda d e o s a e epo ed in pa en hesis
Sou ce(s): Table by Thaku and modi ied by Ma emilola
Table 11.
Reg ession esul s
(mode a ing e ec )
based on 4,303
non inancial lis ed
companies om 9
de eloped coun ies
JEFAS
29,57
140
5.3 Limi a ions and u u e esea ch agenda
This s udy has some limi a ions as i uses la ge i ms only. Fi s ly, a simila s udy on small
i ms may gi e di e en esul s. Bu goodwill concep is cu en ly based on he ma ke alue,
and i is di icul o es ima e he goodwill alues o small i ms because hey a e no publicly
lis ed. The na u e o he business o lack o da a p e en ed all i ms om being included, e en
in he majo lis ed i m ca ego y. Fu u e esea ch on his subjec can assess how many
ac o s, such as he legal sys em, he s a e o law and o de and co up ion, a ec he
ela ionship be ween goodwill asse s and capi al s uc u e.
6. Conclusions
The e ec o goodwill asse s on demand-side ac o s a ec ing o ganiza ions’capi al
s uc u es is examined in his a icle. Addi ionally, using wo sizable samples o lis ed
non inancial en e p ises om bo h eme ging and de eloped na ions, panel da a app oaches
a e used o assess he mode a ing e ec o inancial ma ke de elopmen on he link be ween
goodwill asse s and i ms’capi al s uc u es.
The indings o his panel eg ession demons a e ha whe eas goodwill asse s ha e a
nega i e in luence on en e p ises’capi al s uc u es in ich na ions, hey ha e a conside ably
a o able impac on hose in de eloping coun ies. The di ec e ec esul s o he de eloping
coun ies a e consis en wi h ou expec a ion ha ma ke s in de eloping coun ies a e
conside ing goodwill as a colla e izable asse along wi h ixed asse s. Howe e , he esul s o
he de eloped coun ies a e inconsis en wi h ou expec a ions. Mo eo e , we ound e idence
ha inancial ma ke de elopmen posi i ely mode a es he ela ionship be ween goodwill
asse s and capi al s uc u e in de eloping coun ies, which is consis en wi h ou expec a ions.
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