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Determinants of Capital Structure in Emerging European Economies: Evidence from Slovenian Firms

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  • Matjaž Ärnigoj
  • DuÅ¡an Mramor

Abstract

Although empirical research has shown that some capital structure differences can be explained by modern capital structure theory in mature market economies, the forces behind capital structure decisions in emerging European economies remain a puzzle. We assume that, in these countries, the change in economic system, and therefore corporate governance, has been only gradual; other forces must be at work when firms decide on their capital structures compared to those of mature market economies. After identifying possible relevant factors in Slovenian firms, we show that throughout the period from 1999 to 2006, these factors explained the greatest part of capital structure differences. However, the explanatory power of the proposed factors is changing, which implies changing corporate governance and financial behavior of Slovenian firms during transition.

Suggested Citation

  • Matjaž Ärnigoj & DuÅ¡an Mramor, 2009. "Determinants of Capital Structure in Emerging European Economies: Evidence from Slovenian Firms," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 45(1), pages 72-89, January.
    • Handle: RePEc:mes:emfitr:v:45:y:2009:i:1:p:72-89
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    3. Vo, Xuan Vinh, 2017. "Determinants of capital structure in emerging markets: Evidence from Vietnam," Research in International Business and Finance, Elsevier, vol. 40(C), pages 105-113.
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    9. Alina ȚARAN, 2019. "Corporate ownership and capital structure: evidence from Romania," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 10, pages 133-150, June.
    10. Heryán Tomáš & Růčková Petra & Cerulli Giovanni, 2024. "Financial Performance Among Top10 Automotive Leaders in the EU: Essential Techniques to Investigate the Structure of Moments While Using the GMM with Dynamic Panel Data," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 34(3), pages 26-59.
    11. Sasho Arsov & Aleksandar Naumoski, 2016. "Determinants of capital structure: An empirical study of companies from selected post-transition economies," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 34(1), pages 119-146.
    12. Črnigoj, Matjaž & Verbič, Miroslav, 2014. "Financial constraints and corporate investments during the current financial and economic crisis: The credit crunch and investment decisions of Slovenian firms," Economic Systems, Elsevier, vol. 38(4), pages 502-517.
    13. Saleh F.A. Khatib & Dewi Fariha Abdullah & Ali Shariff Kabara & Saddam A. Hazaea & Tamil Selvi Rajoo, 2020. "Does Debts have any Impact on Governance Bundle and Agency Costs? Over-Governance Hypothesis," Technium Social Sciences Journal, Technium Science, vol. 9(1), pages 384-396, July.
    14. Oyebola Fatima Etudaiye-Muhtar & Oyebola Fatima Etudaiye-Muhtar & Rubi Ahmad, 2015. "Empirical Evidence of Target Leverage, Adjustment Costs and Adjustment Speed of Non-Financial Firms in Selected African Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 5(2), pages 482-488.
    15. Masiak, Christian & Moritz, Alexandra & Lang, Frank, 2017. "Financing Patterns of European SMEs Revisited: An Updated Empirical Taxonomy and Determinants of SME Financing Clusters," EIF Working Paper Series 2017/40, European Investment Fund (EIF).
    16. Péter Hernádi & Mihály Ormos, 2012. "What managers think of capital structure and how they act: Evidence from Central and Eastern Europe," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 12(2), pages 47-71, December.
    17. An Thai & Radu Burlacu, 2022. "Adjustment Speed toward Target Leverage Throughout the Vietnamese Corporate Life Cycle: Under-Versus Over-the-Target Firms," Journal of Business Cycle Research, Springer;Centre for International Research on Economic Tendency Surveys (CIRET), vol. 18(3), pages 315-341, November.
    18. Alessandra Amendola & Marinella Boccia & Gianluca Mele & Luca Sensini, 2020. "Tax Policy and Firms' Financial Choices: Empirical Evidence from the Dominican Republic," MIC 2020: The 20th Management International Conference,, University of Primorska Press.
    19. Darioush Damouri & Jamal Barzegari Khanagha & Mahin Kaffash, 2013. "The Relationship between Changes in the Financial Leverage and the Values of the Tehran Listed Firms," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(3), pages 198-210, July.
    20. Matjaž Črnigoj, 2016. "The Responsiveness of Corporate Investments to Changes in Corporate Income Taxation During the Financial Crisis: Empirical Evidence from Slovenian Firms," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 52(9), pages 2165-2177, September.
    21. Firano, Zakaria & Filali adib, Fatine, 2022. "Optimal Capital structure and financial stability," MPRA Paper 115790, University Library of Munich, Germany, revised 2022.
    22. Tran, Ly Thi Hai, 2022. "Reporting quality and financial leverage: Are qualitative characteristics or earnings quality more important? Evidence from an emerging bank-based economy," Research in International Business and Finance, Elsevier, vol. 60(C).

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