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

Jacek Jaworski and Leszek Czerwonka ()
Additional contact information
Jacek Jaworski: Department of Finance, WSB University in Gdańsk, 80-266 Gdańsk, Poland

Energies, 2021, vol. 14, issue 7, 1-21

Abstract: The aim of the study is to identify the main determinants of the capital structure of energy industry companies in the European Union. The study was based on a panel of 6122 companies from 25 EU countries, operating between 2011 and 2018. The study used multiple regression analysis. We have obtained strong evidence for a positive relationship between corporate debt and tangibility and size, and a negative relationship for profitability and liquidity. The factors that also affect the share of debt in capital have turned out to be growth (positive relationship) and non-debt tax shield (negative relationship), but the statistical significance of these relationships is ambiguous. We have shown that growth of industry business risk is accompanied by an increase in corporate debt and this is a distinguishing feature of the energy industry. For country-specific capital structure determinants, we have obtained strong evidence for the negative relationship between GDP growth, the level of stakeholder rights protection, the degree of capital markets development, and indebtedness of the companies studied. There has been moderate support for the hypotheses of a positive effect of inflation, taxation, and the degree of financial institutions development. Our study has also shown a negative impact of the volume of energy consumption and the share of renewable sources in its production and a positive impact of market monopolization on the indebtedness of companies from the energy industry in the EU.

Keywords: capital structure determinants; energy industry; European Union; capital structure theories; indebtedness of energy industry (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
https://www.mdpi.com/1996-1073/14/7/1871/pdf (application/pdf)
https://www.mdpi.com/1996-1073/14/7/1871/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jeners:v:14:y:2021:i:7:p:1871-:d:525627

Access Statistics for this article

Energies is currently edited by Ms. Agatha Cao

More articles in Energies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().