How Particular Firm-Specific Features Influence Corporate Debt Level: A Case Study of Slovak Enterprises

Abstract

Debt financing is related to borrowing funds from enterprises and investors through bonds, banks, or financial institutions. Interest in debt financing has been rapidly growing in recent years and is now considered one of the most common ways an enterprise can increase its capital to run its business. However, the use of a large amount of debt is associated with the management of corporate indebtedness, requiring the tracking of the entire financial performance of the company. The chief objective of this study was to determine and assess the indebtedness level of enterprises operating in the Slovak Republic using 12 crucial debt ratios and then to clarify whether there are statistically relevant dissimilarities in corporate debt as a result of the firm size and its legal form, representing relevant company-specific features having an impact on corporate indebtedness. Subsequently, a more elaborate analysis addressing statistically relevant dissimilarities between separate indebtedness ratios in relation to the size of the company and its legal form was carried out by deploying the nonparametric Kruskal–Wallis test. We leveraged the Bonferroni correction to specify where stochastic ascendancy occurs. The Kruskal–Wallis test result revealed statistically significant dissimilarities in the values of debt ratios as a result of the firm size and the legal form of the company, which confirmed previous results indicating the most relevant determinants shaping corporate debt. Recognizing the repercussions of firm size and legal form on the corporate debt policy plays an important role, as these company-specific features may be perceived as proxies for the default likelihood or for the volatility of corporate assets, making the regulatory process of creditors and stakeholders straightforward. The findings confirmed the theories of numerous researchers who claimed that firm size and legal form are critical aspects of corporate debt.

Sharing Economy as Unconventional Alternative to Traditional Transport Services

“…Initially, it was necessary to map and quantify the level of sales on the platforms. The use of a debt is associated with the management of corporate indebtedness, requiring monitoring of the entire financial performance of the company (Gajdosikova et al, 2023). Indebtedness is a common and widely known concept, whether at the level of a country or within a company.…”

The Relevance of Sectoral Clustering in Corporate Debt Policy: The Case Study of Slovak Enterprises

“…Numerous determinants, such as prioritizing the financing of business operations basically through debt, have an impact on corporate indebtedness and affect the composition of corporate capital in different ways (Gajdosikova et al 2023). The size of the firm greatly influences the level of corporate debt.…”

“…Currently, when the economies of different countries around the world are experiencing adverse developments, mostly due to the COVID-19 pandemic, the war in Ukraine, or the energy crisis, overcoming a difficult period of business management is crucial. Along with measuring corporate performance (e.g., in terms of sustainable growth rate- Bagh et al 2023, of sustainable development-Cris , an-Mitra et al 2016Cris , an-Mitra et al 2020, or of debt level- Gajdosikova et al 2023), this process also includes assessing the achieved results from the point of view of financial health, evaluating the methods used to measure performance, and fulfilling long-term corporate objectives for the future (Valaskova and Nagy 2023). Using these methods and procedures, firms are able to obtain and subsequently evaluate data that reflect not only the dynamics of corporate development but also quantify the impact of the economic crisis on changes in the structure of financial indicators over the years and formulate proposals and recommendations for the future 2 of 30 (Stratone 2023).…”

Industry 4.0: Marvels in Profitability in the Transport Sector

“…The data was gained from the ORBIS database, which is provided by Bureau van Dijk. The database supplies information on more than 400 million large-scale private and public enterprises [56]. It was focused only on enterprises from NACE H, specifically, H.49 Land transport and transport via pipelines, H.50 Water transport, and H.51 Air transport.…”