The impact of capital structure on the performance efficiency of Baltic listed companies

Abstract

The capital structure can influence the behavior of the company as well as its performance results and its value. However, the effect can be quite different. The financial indicators of Lithuanian, Latvian and Estonian listed companies published in their annual reports have been used in order to investigate the impact of capital structure on performance efficiency of the companies. The research included data of only non-financial companies, because the capital structure of financial institutions is specific and the performance efficiency of these companies is affected in completely different way. The research covers the period of 2002 -2011. Data of 70 companies were used in this research: 28 Lithuanian companies, 14 Estonian companies, and 28 Latvian companies. In order to examine the interaction of capital structure with the companies' performance efficiency, the correlation analysis between the indicators of indebtedness level (long-term financial debt ratio, short-term financial debt ratio, financial debt ratio, non-financial debt ratio) and the following performance indicators: operating profit margin, net profit margin, return on equity, return on assets, liquidity ratio, capital asset turnover and total asset turnover was performed. The p-value was used to verify the reliability of observed correlation. In order to estimate the strength of the influence of indebtedness on performance efficiency of the companies, the multivariate regression analysis was performed. During the regression analysis, the indicators describing performance efficiency of the companies were used as dependent variables and financial and non-financial debt ratios were used as independent variables. The research evidenced that the higher financial indebtedness level affects negatively the profitability ratios of companies in the Baltic countries; also both financial and non-financial debts reduce the liquidity of the companies. It was also found that influence of the debts on the efficiency of asset management is ambivalent: financial debt has a negative impact on capital asset turnover and total asset turnover, but higher level of non-financial debts leads to higher level of the turnover indicators.

Relationship Between Stock Prices and Financial Ratios of the Listed Companies

“…(2014) teigia, jog įmonės finansinės veiklos efektyvumą objektyviausiai parodo kapitalo pelningumo rodikliai. Šiuo pelningumu labiausiai domisi kapitalo savininkai, kreditoriai ir investuotojai, nes iš šių rodiklių galima spręsti apie investicijų pelningumą ir galimybę gauti dividendų (Norvaišienė, 2012). Nuosavo kapitalo pelningumas parodo nuosavo kapitalo sukurtą pelną ir tam tikru aspektu -įmonės vadovybės darbo efektyvumą naudojant investuotą kapitalą (Hutabarat ir Simanjuntak, 2013).…”

“…Atlikta literatūros analizė parodė, jog Norvaišienė (2012), Žilinskij ir Rutkauskas (2012), Tamošiūnienė ir Paškevičienė (2016) nagrinėdami akcijų kainų sąsajas su įmonės finansiniais rodikliais skaičiuoja grynojo pelningumo, turto pelningumo ir nuosavo kapitalo pelningumo rodiklius, kurie geriausiai parodo įmonės veiklos galutinius rezultatus.…”

“…tuo aukštesnis įmonės ilgalaikio turto valdymo efektyvumo lygis (NASDAQ OMX Vilnius..., 2010;Tamošiūnienė ir Paškevičienė, 2016). Buvo skaičiuojami debitorinio įsiskolinimo apyvartumo ir ilgalaikio turto apyvartumo rodikliai, nes nagrinėjant akcijų kainų ir finansinių rodiklių sąveiką būtent šiuos veiklos efektyvumo rodiklius rekomenduoja skaičiuoti Norvaišienė (2012), Tamošiūnienė ir Paškevičienė (2016), Hutabarat ir Simanjuntak (2013).…”

Do Efficiency Ratios Help Investors to Explore Firm Performances? Evidence from Italian Listed Firms

“…The examination of these relationships has also led our study to explore the role that efficiency has on firms' capital structure in order to gain insight into the significance of relationships in particular related to cash flow. To date, this topic has received little attention by the research literature (Berger & Bonaccorsi di Patti, 2006;Margaritis & Psillaki, 2007;Norvaisiene, 2012). Berger and Bonaccorsi di Patti (2006) analyzed profit efficiency and capital structure for the US banking industry.…”

“…Using Data Envelopment Analysis, Margaritis and Psillaki (2007) found that the efficiency of 12,240 New Zealand firms has a positive effect on leverage at low to mid-leverage levels and a negative effect at high leverage ratios. Norvaisiene (2012) focused on the reverse causality from capital structure to efficiency.…”