Global economic instability and corporate structure: Evidence from emerging markets

Abstract

This study examines the influence of global economic instability on corporate capital structure of companies from selected emerging markets, focusing on publicly listed companies from Southeastern European countries over the period 2010–2024. The sample includes non-financial companies listed on stock exchanges from the Southeastern European region, involving a period characterized by significant external shocks, including the aftermath of the global financial crisis, the COVID-19 pandemic, and recent geopolitical tensions. Using a dynamic panel data framework, the study analyzes how the mixture of microeconomic, macroeconomic and corporate governance factors in the periods of global uncertainty influenced companies’ leverage ratios. The findings indicate that heightened global instability leads to a reduction in long-term leverage and a greater reliance on short-term debt, reflecting precautionary financing behavior and constrained access to external capital markets. The results contribute to the capital structure literature by providing evidence from relatively underexplored Southeastern European emerging markets and by highlighting the sensitivity of corporate financing decisions to global instability. The findings have important implications for policymakers, investors, and corporate managers in designing resilient financial strategies in turbulent macroeconomic environments.