КОЕФІЦІЄНТ СПВВВІДНОШЕННЯ БОРГУ ДО ВЛАСНОГО КАПІТАЛУ В СТРУКТУРІ КАПІТАЛУ БНП

English

Debt-to-Equity ratio in MNCS capital structure

Abstract. Introduction. The capital structure of multinational corporations (MNCs) significantly influences their overall risk, valuation, and financial performance [6]. Among various measures to evaluate capital structure, the Debt-to-Equity (D/E) ratio emerges as a central metric. It quantifies the extent to which a corporation relies on debt financing relative to equity financing [4]. In practice, maintaining an optimal D/E ratio is critical, as it directly affects the firm's risk profile, cost of capital, and attractiveness to investors and creditors [5]. This study investigates the implications of different capital structure theories through analysis of historical D/E ratios in periods of economic turbulence. Purpose. the purpose of this research is to explore the practical implications of MNE capital structure theories by analyzing the historical trends and fluctuations of the Debt-to-Equity (D/E) ratio of U.S. nonfinancial corporations, particularly during economic crises. It aims to distinguish between accounting-driven and cash-flow-driven changes in D/E to provide a clearer understanding of corporate financial strategies under stress conditions. Materials and methods. The study utilizes historical data on the Debt-toEquity ratios of U.S. nonfinancial corporations spanning from 1961 to 2021, sourced from Annual tables of integrated macroeconomic accounts for the United States [3]. Two distinct measures of D/E ratios are analyzed: classical D/E ratios, inclusive of accounting-based adjustments, and incremental D/E ratios, reflecting purely cash-flow-based financing activities [14]. Comparative analysis is performed across multiple financial crises, notably the 2007–2008 global financial crisis, the 2011 European sovereign debt crisis, the 2014–2015 commodity crisis, and the 2018 global trade tensions [3; 8; 14]. Results. The analysis reveals significant volatility in classical D/E ratios during crisis periods, primarily driven by accounting adjustments such as asset impairments and equity revaluations [14]. In contrast, incremental D/E ratios displayed relatively moderate fluctuations, emphasizing stability in actual financial decisions involving debt issuance or repayment and equity transactions [14]. Notably, classical D/E ratios increased dramatically during the 2008 financial crisis, whereas incremental ratios showed modest changes, suggesting substantial accounting distortions [8; 14]. Discussion. The findings indicate that accounting-based leverage metrics (classical D/E ratios) frequently overstate corporate financial vulnerability during economic crises due to their sensitivity to non-cash accounting adjustments [14]. Incremental D/E ratios, however, provided more consistent and economically meaningful insights into corporations' strategic responses to crises [14]. This highlights the necessity for analysts, investors, and rating agencies to incorporate incremental D/E ratios alongside traditional measures to better assess true financial stability and risk exposure [1; 13; 14]. Future research should investigate specific variations in the responsiveness of classical and incremental D/E ratios to economic shocks [2; 7]. Additionally, examining international differences influenced by varying accounting standards (such as IFRS vs. US GAAP) could yield important insights [14]. Further studies might also focus on incorporating qualitative factors, such as managerial behavior and investor sentiment, to enrich the understanding of capital structure adjustments during economic uncertainty [9; 11 ].

Keywords: Debt-to-Equity Ratio (D/E); financial decision-making; multinational corporations; MNC; capital structure; financing decisions; risk management; corporate finance