Determinants of Capital Structure: Empirical Study of the Industrial Companies in North Macedonia

Elena Shkrekova () and Aleksandar Naumoski ()
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Elena Shkrekova: Ss. Cyril and Methodius University in Skopje, Faculty of Economics - Skopje
Aleksandar Naumoski: Ss. Cyril and Methodius University in Skopje, Faculty of Economics - Skopje

No 27, Proceedings of the 5th International Conference "Economic and Business Trends Shaping the Future" 2024 from Faculty of Economics-Skopje, Ss Cyril and Methodius University in Skopje

Abstract: This study explores the determinants of capital structure within industrial firms in North Macedonia, focusing on a decade-long panel of companies listed on the Macedonian Stock Exchange from 2012 to 2022. Using panel regression analysis, the research examines the impact of key factors—firm size, profitability, asset tangibility, growth, risk, and taxation—on the leverage decisions of these firms. The results reveal that firm size and asset tangibility are positively associated with leverage, indicating these companies’ reliance on debt, especially when supported by substantial physical assets. In contrast, profitability demonstrates a negative relationship with leverage, consistent with the Pecking Order Theory, suggesting that profitable firms in this emerging market prefer internal financing. Growth, measured through sales, shows a positive correlation with leverage, though the impact varies with growth metrics. Overall, this study highlights the unique capital structure dynamics in a transitioning economy and provides valuable insights for financial managers operating in similar markets.

Keywords: Capital structure; Leverage; Theories of capital structure; Trade-off theory; Pecking order theory (search for similar items in EconPapers)
JEL-codes: G21 G30 G32 G33 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2024-12-15
New Economics Papers: this item is included in nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:aoh:conpro:2024:i:5:p:251-263

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