In the reading “Capital structure”, i’m confused about these statements:
1/ Companies in higher-inflation countries usually exhibit lower levels of financial leverage… & have a shorter debt maturity structure…
- I thought that in high-inflation countries, wealth is transfered from debt holders to issuers, so companies will take benefits from using higher leverage?
2/ Companies in countries with high GDP growth rely more on equity financing.
- I do not know the reason :-?
Plz help me
1/ Companies in higher-inflation countries usually exhibit lower levels of financial leverage… & have a shorter debt maturity structure…
- I thought that in high-inflation countries, wealth is transfered from debt holders to issuers, so companies will take benefits from using higher leverage?
2/ Companies in countries with high GDP growth rely more on equity financing.
- I do not know the reason :-?
Plz help me