Meta-study on relationship between macroeconomic and institutional environment and internal determinants of enterprises’ capital structure

Abstract

The enterprise capital structure is influenced by internal factors, i.e., the share of fixed assets in total assets, the size and growth of the enterprise, its liquidity and profitability, and the non-debt tax shield. The literature shows that external factorsmacroeconomic and institutional specifics of enterprises' environmentmay shape the strength and direction of these dependencies. The main aim of this article is to identify the relationship between external factors and the impact of internal determinants on the capital structure. The study includes the meta-analysis of papers which provide information on the relationship between internal factors and the capital structure for 35 countries. The study includes the papers published after 2000 whose research covered the period 1993-2017. A statistically significant relationship between four external factors (inflation, G.D.P. growth rate, G.D.P., index of protection of the creditors and debtors rights) and the strength and direction of the impact of internal factors on the capital structure has been found. In addition, the unambiguously negative impact of two internal factors (liquidity and profitability of the enterprise) on indebtedness was diagnosed. It also reveals that the pecking order theory constitutes a strong theoretical basis for research into the capital structure of enterprises.

Determinants of Enterprises’ Capital Structure in Energy Industry: Evidence from European Union

“…For the other two determinants (Hypothesis 1e), moderate support was obtained. The obtained results are consistent with previous studies of the energy industry [24,27,28,45] as well as with studies on companies from different industries [21,43]. This shows that the internal factors influencing capital structure impact companies in the energy industry in a similar way, regardless of the region from which the studied companies originate.…”

“…Studies conducted for specific countries were subject to meta-analyses [21,39]. In their study, Hang et al [39] included 50 articles from reputable scientific journals and 50 publications from outside the major databases.…”

“…The first of these affected the corporate debt positively, while the next two negatively. On the other hand, Jaworski and Czerwonka [21] meta-analyzed 49 articles published between 1993 and 2017 referring to listed companies from 35 countries. PROF and LIQ turned out to be significant firm-specific factors, both negatively affecting corporate debt.…”

“…The analysis of capital structure theory and numerous empirical studies have identified a number of factors that influence the financial behavior of firms. These factors are divided into the three following groups [19][20][21]: (i) company-, (ii) industry-, and (iii) country-specific factors. Firm-specific factors have the widest impact on the capital structure of firms.…”

Measuring the macroeconomic impact of economic diplomacy using VARFIMA model for Croatia 1990-2018

“…Our study shows that economic diplomacy has a positive impact on the country's macroeconomic performances in the long run. Results are in line with the study of Peres et al (2018), Jaworski and Czerwonka (2019), Buturac et al (2019).…”