Next Article in Journal
A Closer Look at the Halloween Effect: The Case of the Dow Jones Industrial Average
Previous Article in Journal
The Impact of Revenue Diversification on Bank Profitability and Stability: Empirical Evidence from South Asian Countries
Article Menu

Export Article

Open AccessArticle
Int. J. Financial Stud. 2018, 6(2), 41; https://doi.org/10.3390/ijfs6020041

The Impact of Capital Structure on Risk and Firm Performance: Empirical Evidence for the Bucharest Stock Exchange Listed Companies

Department of Finance, The Bucharest University of Economic Studies, 6 Piata Romana, 010374 Bucharest, Romania
*
Author to whom correspondence should be addressed.
Received: 21 December 2017 / Revised: 2 April 2018 / Accepted: 3 April 2018 / Published: 10 April 2018
Full-Text   |   PDF [1843 KB, uploaded 3 May 2018]   |  

Abstract

This paper analyzes the evolution of the main theories regarding the capital structure and the related impact on risk and corporate performance. The capital structure is a dynamic process that changes over time, depending on the variables that influence the overall evolution of the economy, a particular sector, or a company. It may also change depending on the company’s forecasts of its expected profitability, capital structure being, in fact, a risk–return compromise. This study contributes to the literature by investigating the drivers of capital structure of the firms from the Romanian market. For the econometric analysis, we applied multivariate fixed-effects regressions, as well as dynamic panel-data estimations (two-step system generalized method of moments, GMM) on a panel comprising the companies listed on the Bucharest Stock Exchange. The analyzed period, 2000–2016, covers a cycle with significant changes in the Romanian economy. Our results showed that leverage is positively correlated with the size of the company and the share price volatility. On the other hand, the debt structure has a different impact on corporate performance, whether this calculated on accounting measures or seen as market share price evolution. View Full-Text
Keywords: capital structure; leverage; bankruptcy risk; corporate performance; fixed-effects regressions; two-step system GMM; emerging countries capital structure; leverage; bankruptcy risk; corporate performance; fixed-effects regressions; two-step system GMM; emerging countries
Figures

Figure 1

This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).
SciFeed

Share & Cite This Article

MDPI and ACS Style

Nenu, E.A.; Vintilă, G.; Gherghina, Ş.C. The Impact of Capital Structure on Risk and Firm Performance: Empirical Evidence for the Bucharest Stock Exchange Listed Companies. Int. J. Financial Stud. 2018, 6, 41.

Show more citation formats Show less citations formats

Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

Related Articles

Article Metrics

Article Access Statistics

1

Comments

[Return to top]
Int. J. Financial Stud. EISSN 2227-7072 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
Back to Top