Determinants of Debt-Equity Choice – Evidence from Poland

Authors

  • Bogna Kazmierska-Jozwiak University of Lodz Faculty of Management Poland
  • Jakub Marszałek University of Lodz Faculty of Management Poland
  • Paweł Sekuła University of Lodz Faculty of Management Poland

DOI:

https://doi.org/10.5195/emaj.2015.76

Keywords:

capital structure, trade-off theory, pecking order theory, Poland, emerging market

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.

Author Biographies

Bogna Kazmierska-Jozwiak, University of Lodz Faculty of Management Poland

Assistant Professor of Finance

Jakub Marszałek, University of Lodz Faculty of Management Poland

Assistant Professor of Finance

Paweł Sekuła, University of Lodz Faculty of Management Poland

Assistant Professor of Finance

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Published

2015-11-12

Issue

Vol. 5 No. 2 (2015)

Section

Articles

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