Abstract
The question of debt-equity choice has so far been widely discussed in literature. The aim of the paper is to analyse the determinants of capital structure of Polish enterprises. We analysed factors that may impact the indebtedness. This analysis fills in the gap in worldwide studies with the case of a country representing the group of „emerging markets”. The paper examines capital structure determinants of non-financial companies listed on the Warsaw Stock Exchange. We used five independent variables compatible with the up-to-date achievements in the field. The results indicate that there is an evidence of a significant negative relationship between the size of a company, its growth rate, profitability, tangibility and the level of total debt. The study shows positive relationship between growth prospects of the company and the debt level. The results of the study indicate that the pecking order theory better explains the changes in indebtedness of analysed companies than other capital structure theories. Obtained results are mostly consistent with earlier studies conducted in the Poland and with studies in Western economies.
Highlights
Capital structure of an enterprise and its impact upon the functioning of a business and its value was, is and will remain the subject of numerous studies and analyses
Under the trade-off theory, optimal capital structure level is identified by the debt to equity ratio, for which risk accompanying the debt is compensated with tax benefits connected with debt servicing
We obtained an interesting group of similar enterprises, which pursue similar asset management policy but have significantly different growth prospects differently perceived by investors
Summary
Capital structure of an enterprise and its impact upon the functioning of a business and its value was, is and will remain the subject of numerous studies and analyses. Myers (1984) concludes that we still do not know how enterprises shape their capital structure. In his considerations he makes references to the theory of dividend policy and limited knowledge on optimal solutions for paying out dividends. He analyses the results of studies conducted and published by G. S.C. Myers and N.S. Majluf (1984) presented theoretical justification for the above results based on the signalling properties of specific capital and by that they formulated the assumptions of the pecking order of theory
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
