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On Financial Performance and Capital Structure of Romanian Companies

Author

Listed:
  • Viorela Ligia VAIDEAN

    (”Babes-Bolyai” University)

Abstract

The purpose of this paper is to validate the theoretical background of the specialized economic literature on financial performance of companies as a function of different capital structure determinants on the Romanian market. As such, the capital structure considered indicators are the short term, long term and total debt ratios, further adding the logarithm of Sales as a proxy for the size of a company. For performance, the paper used the companies’ return on assets and net profit margin, significant results being obtained for the former only. Data were processed with the help of the IBM SPSS 20 software, using the linear regression technique. Basically, the sample points towards a negative weak correlation between total debt and return on assets.

Suggested Citation

  • Viorela Ligia VAIDEAN, 2014. "On Financial Performance and Capital Structure of Romanian Companies," Finante - provocarile viitorului (Finance - Challenges of the Future), University of Craiova, Faculty of Economics and Business Administration, vol. 1(16), pages 151-157, December.
    • Handle: RePEc:aio:fpvfcf:v:1:y:2014:i:16:p:151-157
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    File URL: http://feaa.ucv.ro/FPV/016-016.pdf
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    References listed on IDEAS

    as
    1. Joshua Abor, 2005. "The effect of capital structure on profitability: an empirical analysis of listed firms in Ghana," Journal of Risk Finance, Emerald Group Publishing, vol. 6(5), pages 438-445, November.
    2. Muritala Taiwo Adewale & Oguntade Busola Ajibola, 2013. "Does Capital Structure Enhance Firm Performance? Evidence from Nigeria," The IUP Journal of Accounting Research and Audit Practices, IUP Publications, vol. 0(4), pages 43-55, October.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    profitability; performance; rate of return; capital structure; linear regression modeling;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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