- Journal of Business Economics and Finance
- Vol: 8 Issue: 4
- CAPITAL STRUCTURE AND PERFORMANCE: EVIDENCE FROM EUROPEAN LISTED COMPANIES
CAPITAL STRUCTURE AND PERFORMANCE: EVIDENCE FROM EUROPEAN LISTED COMPANIES
Authors : Carmelo Intrisano, Anna Paola Micheli, Anna Maria Calce
Pages : 259-267
View : 5 | Download : 2
Publication Date : 2019-12-30
Article Type : Research
Abstract :Purpose - The paper aims to investigate the existence of a relationship between financial structure and performance for European listed companies. Methodology - The reference period of the study is three years (2015-2017). In line with Modigliani and Miller’ Theory we assume that independent variable (debt/equity ratio) does not influence performance (measured by ROE and ROA). We use correlation and linear regression analysis. Findings - Results show the existence of a weak relationship between capital structure expressed as debt/equity ratio and performance measures. However, the R2 of the model has a limited explanatory capacity, so only an insignificant part of the variability of performance measures can be explained by changes in capital structure. The remaining part depends on factors not included in the linear models formulated. Conclusion- The study shows that the financial structure does not condition the economic and financial performance of European listed companies.Keywords : Capital structure, performance, value, corporate finance