Capital Structure Determinants: A Sectorial Analysis for the Romanian Listed Companies

Abstract

This study analyses the differences in financing policies for the Romanian listed companies taking into account the economic sectors. They are financing their assets, in this order, on equity, commercial debt and, finally, on financial debt. However, there are some differences between sectors and between book and market values. Concerning the determinants of capital structure, analysed through OLS regression, the four variables used in the model (tangible assets, size, profitability and market-to-book ratio) are significant. Moreover, the relationship between capital structure and the firm profitability for the Romanian listed shares for the period 1997-2005 was analysed through Granger (1969). Capital structure does not Granger cause financial returns and the hypothesis that financial returns does not Granger cause capital structure can not be rejected.

Keywords: capital structure, performances, industry analysis, signalling theory, pecking order theory, Romania

JEL Classification: G32