ABSTRACT:
This paper analyzes the relationship between the financial structure and the business model of companies. Thanks to the Business Model Economics Index (BMEI), we are able to tell apart companies and sector able to grow independently, versus those that need to raise debt to growth. The research hypothesis that we have tested is the ability of this index to explain the financial structure of firms and the industrial sectors to which the companies belong, leading to a separation between companies and sectors that enjoy a sustainable growth (where the coefficient is negative ) compared to companies that need funding in other to growth (and in this case the coefficient is positive). The BMEI was identified in the coefficient of the Equation which links the revenue growth to the financial structure. The empirical analysis is made on a sample of over 210,000 European companies. The results confirmed the correlation between the financial structure and the BMEI coefficient. The results are verified with multiple econometric models and by adopting various summary measures of the financial structure. The contribution provided by this research to literature and economic actors can be appreciated in many respects. At the theoretical level, we find an index that correlate the growth in revenues with the financial structure. This model is useful both at the micro level and at the macro level. At the micro level, the BMEI allows forecasts on financial needs and on the financial structure in relation to given development hypotheses; at the micro level, the sign and magnitude of the BMEI are a benchmark that allows companies to be divided according to their busines model and their degree of financial sustainability. At a macro level, industry studies can benefit from a new and more accurate analysis of the financial structure of firms and industries. Finally, at macro level, the economic cycle is correlated with the degree of indebtedness of the industrial sectors.
KEYWORDS: Financial statement analysis; sustainable financial growth; financial structure; business model.
