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Analysis of Factors Influencing Financial Leverage In Lithuanian Listed Companies

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  • Dalia Kaupelytė
  • Domas Mscichauskas

Abstract

The goal of the paper is to identify factors influencing financial leverage in Lithuanian listed companies. The factors influencing financial leverage have been analyzed in theoretical and empirical literature although the authors haven't found this type of research done in Lithuania. The authors analyze the theories explaining financial leverage and factors influencing financial leverage. Survey data include 2008-2012 year financial statements of 30 firms listed on the NASDAQ OMX Vilnius stock exchange. The methods used in this paper include econometric and regression analysis. The research allowed the confirmation of financial constraints (specifically, working capital) and a firm's industry as factors influencing financial leverage. Financial constraints impel companies to have higher financial leverage, and firms in the same industry are predisposed to change their financial leverage accordingly.

Suggested Citation

  • Dalia Kaupelytė & Domas Mscichauskas, 2016. "Analysis of Factors Influencing Financial Leverage In Lithuanian Listed Companies," Central European Business Review, Prague University of Economics and Business, vol. 2016(2), pages 74-86.
    • Handle: RePEc:prg:jnlcbr:v:2016:y:2016:i:2:id:153:p:74-86
    DOI: 10.18267/j.cebr.153
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    References listed on IDEAS

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    1. Joaquim J.S. Ramalho & Jacinto Vidigal da Silva, 2009. "A two-part fractional regression model for the financial leverage decisions of micro, small, medium and large firms," Quantitative Finance, Taylor & Francis Journals, vol. 9(5), pages 621-636.
    2. Murray Z. Frank & Vidhan K. Goyal, 2009. "Capital Structure Decisions: Which Factors Are Reliably Important?," Financial Management, Financial Management Association International, vol. 38(1), pages 1-37, March.
    3. Armen Hovakimian, 2004. "The Role of Target Leverage in Security Issues and Repurchases," The Journal of Business, University of Chicago Press, vol. 77(4), pages 1041-1072, October.
    4. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
    5. Frank, Murray Z. & Goyal, Vidhan K., 2003. "Testing the pecking order theory of capital structure," Journal of Financial Economics, Elsevier, vol. 67(2), pages 217-248, February.
    6. Edward I. Altman, 1968. "The Prediction Of Corporate Bankruptcy: A Discriminant Analysis," Journal of Finance, American Finance Association, vol. 23(1), pages 193-194, March.
    7. Abel Ebel Ezeoha, 2008. "Firm size and corporate financial-leverage choice in a developing economy: Evidence from Nigeria," Journal of Risk Finance, Emerald Group Publishing, vol. 9(4), pages 351-364, August.
    8. Peter MacKay & Gordon M. Phillips, 2005. "How Does Industry Affect Firm Financial Structure?," The Review of Financial Studies, Society for Financial Studies, vol. 18(4), pages 1433-1466.
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    Cited by:

    1. Mohamed Aymen Ben Moussa & Amira El Feidi, 2023. "The Impact of Leverage on Financial Performance of Tunisian Quoted Firms," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 101-116.

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    More about this item

    Keywords

    financial leverage; listed companies; factors influencing financial leverage;
    All these keywords.

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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