CAPITAL STRUCTURE DECISIONS OF THE ROMANIAN FIRMS
CAPITAL STRUCTURE DECISIONS OF THE ROMANIAN FIRMS

Summary/Abstract: This paper investigates the characteristics of the Romanian firms, which represent the determinants of the capital structure according to modern theories on capital structure, and the relationship between these characteristics and firms’ debt ratio. The average debt ratio of Romanian companies is lower than that observed in the case of companies in the developed countries. We elaborated a panel data model, which highlights the influence of capital structure determinants such as profitability, tangibility, firm size and growth opportunities on the debt ratios of Romanian firms. Our results are consistent with both trade-off and pecking order theories of capital structure.

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