The Financial and Real Performance of Non-Financial Corporations in the Euro Area: 1999-2015

50 Pages Posted: 10 Jan 2018

See all articles by Vicente Salas-Fumás

Vicente Salas-Fumás

University of Zaragoza - Department of Business Administration and Organization

Lucio San Juan

Banco de España

Javier Vallés

Banco de España

Date Written: January 9, 2018

Abstract

This paper documents the aggregated performance of non-financial corporations in the largest euro area economies and compares it with the performance of the US corporate sector as reported by National Economic Accounts and Financial Accounts. We find significant cross-country structural differences in the behaviour of real and financial indicators that remain long after the creation of the single currency, although there has been convergence in the average cost of debt paid by corporations and in the deleveraging process unfolding after the financial crisis. German corporations stand out, with higher productivity of operating capital and profit margins. Moreover, a lower average cost of debt and also a lower average corporate tax rate have contributed to a higher return of equity in Germany compared with the return in other EU countries and the US. Since the crisis years, German and Spanish companies have joined the US corporations in saving more than they invest. We also find some evidence of a declining proportion of cash-flows allocated to capital investment.

Keywords: Non-financial corporations, Sectoral National Accounts, financial performance, rates of return of assets and equity, euro area

JEL Classification: G30

Suggested Citation

Salas-Fumás, Vicente and San Juan, Lucio and Vallés, Javier, The Financial and Real Performance of Non-Financial Corporations in the Euro Area: 1999-2015 (January 9, 2018). Banco de Espana Occasional Paper No. 1708, Available at SSRN: https://ssrn.com/abstract=3098775 or http://dx.doi.org/10.2139/ssrn.3098775

Vicente Salas-Fumás (Contact Author)

University of Zaragoza - Department of Business Administration and Organization ( email )

Dr. Cerrada 1
5005 Zaragoza
Spain
+34 976 761803 (Phone)

Lucio San Juan

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Javier Vallés

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

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