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Prepared by Christian Ebeke (EUR).
Inter-company debt refers to debt between all companies. Intra-company debt refers to debt between companies of a same group.
The time coverage of the dataset will not take into account possible improvements in some sectors (e.g. construction, real estate) over the most recent years.
The Orbis dataset has a good coverage of firm debt level but limited information on interest expenses making the computation of the ICR challenging. To deal with large missing values on the ICR, we proceeded in two steps. First we estimated the interest expenses for the missing cells using the average effective rate (interest expenses over lagged debt) at the firm size-time level. Then we used it to approximate the missing interest expenses and then the ICR. A number of procedures were applied to deal with outliers in the dataset (e.g. ICR values were bounded at 0 and 50). Only observations on which the information on EBITDA, Debt, interest expenses, and cost of employees were kept to compute the ICR and produce the shock analyses. We end up with more than 700 observations for the ICRs over the period 2007-2013.
We adjusted the computed ICR values to 0 if EBITDA is negative and to 50 if the observed ICR is above this value.
Among other, intangible assets include patent, trademarks, business methodologies.
The sample spans the years 2007-2013 and covers 192 firms (and about thousand observations) for which we have information on investment in intangible assets and other variables. Investment in intangible fixed assets is measured by the annual increase in the stock of intangible fixed assets over lagged stock of intangible fixed assets. We removed outliers in line with Cleary (1999). The cutoff values are 200 and -200 for investment/net fixed asset, 100 and -100 for real sales growth, and 100 and 0 for leverage.