MODERN MNEs FINANCIAL LEVERAGE AND CAPITAL STRUCTURE: THE COMPARATIVE ANALYSIS OF CLUSTER MODELS
DOI:
https://doi.org/10.17721/apmv.2016.127.1.149-162Abstract
The cluster analysis applying the k-means method has been carried out. The analysis allowed discovering statistical features on financial leverage and capital structure of explored MNEs considering their industrial specificity as well. Clusterization was performed by thee criteria: the level of debt ratio; the level of direct financial leverage by means of the pair linear regression factor reflecting the influence of debt ratio on ROI; the level of indirect financial leverage by means of the pair linear regression factor reflecting the influence of short-term debt ratio on current market stock price.
Three persistent models of financial leverage have been revealed and quantitatively identified. The model of reverse financial leverage implies the existence of reverse effect either from direct or indirect financial leverage as well as the low share of debt in capital structure. This model is typical for oil industry, mostly typical for pharmaceutical and mining industries and partially typical for electronics and food industries. The highest direct financial leverage model can be distinguished by the second highest among clusters (but-positive) average value of indirect financial leverage effect and the highest direct financial leverage effect among clusters. The level of debt usage in this model is relatively high. It describes only MNEs having not typical values of clusterization criteria. This did not allow to make sectoral generalizations. The
highest debt model implies the use of the largest share of debt in their capital structure. This model shows the average positive effect of indirect financial leverage and the minimal reverse effect of direct financial leverage. It is typical for wholesale trade MNEs and mostly typical for utilities, telecommunications and motor vehicles corporations.
Key words: MNE capital structure, MNE financial leverage, cluster analysis, k-means method, regression model, debt ratio, short-term debt ratio, ROI.
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