Determinants of Capital Structure: Empirical Evidence of Manufacturing Companies in the Republic of Serbia

Aleksandra Stoiljković, Slavica Tomić (), Bojan Leković and Milenko Matić
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Aleksandra Stoiljković: Department of Management, Faculty of Economics in Subotica, University of Novi Sad, 24000 Subotica, Serbia
Slavica Tomić: Department of Management, Faculty of Economics in Subotica, University of Novi Sad, 24000 Subotica, Serbia
Bojan Leković: Department of Management, Faculty of Economics in Subotica, University of Novi Sad, 24000 Subotica, Serbia
Milenko Matić: Department of Management, Faculty of Economics in Subotica, University of Novi Sad, 24000 Subotica, Serbia

Sustainability, 2022, vol. 15, issue 1, 1-19

Abstract: The subject of research in the paper is the capital structure of companies in the Republic of Serbia. The research sample consists of companies that operated in the manufacturing industry in the Republic of Serbia in the period 2006–2020. The aim of the research is to identify firm-specific variables that have significant influence on the capital structure of the analyzed companies. Using a panel data methodology, three leverage models were estimated: long-term leverage, short-term leverage, and total leverage. The research results confirm the importance of company size, profitability, tangibility, and risk in determining the capital structure of companies in the Republic of Serbia. However, the research results show that size, profitability, and tangibility of assets have the opposite effect on long-term leverage compared to short-term and total leverage. That is, the behavior of companies in the Republic of Serbia in the case of long-term leverage is in accordance with the predictions of the trade-off theory, while in the case of short-term and total leverage, the behavior of companies can be explained by the pecking order theory.

Keywords: capital structure; trade-off theory; pecking order theory; leverage; Republic of Serbia (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
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