Graduate papers
Description of the graduate paper
Form of studies Master
Title of the study programm Business Finance
Title in original language Kapitāla struktūras ietekme uz Ukrainas kompāniju darbības rezultātiem
Title in English The Impact of Capital Structure on Company Performance: a Case from Ukrainian companies
Department 22000 Faculty of Engineering Economics and Management
Scientific advisor Nataļja Lāce
Reviewer Nadežda Koleda
Abstract Since there are significant contradictions among the available theoretical frameworks and empirical studies, there is a need for investigation of how the financing choice takes place in reality in various country settings. Furthermore, in spite of the continuing active debate on capital structure, there is little empirical evidence on how Ukrainian companies actually select between financing options. Only few researches are presently dedicated to the issue of capital structure impact on firm performance that reinforces the importance and relevance of this topic in Ukraine. The research object is Ukrainian companies, and the research subject is impact of capital structure choice on firm performance. The research aim is the investigation of the capital structure decisions and their impact on performance in the context of Ukrainian companies. Seeking to contribute to the understanding of the effects of capital structure on firm performance in Ukraine, this thesis contains several important elements of scientific novelty. First of all, the theoretical frameworks were summarized in terms of their view on optimal capital structure as well as the relationship between capital structure and firm performance. Besides, the previous empirical findings from the analysis of the relationship between capital structure and firm performance were also summarized within this work. Moreover, the existing theories were tested regarding their relevance and ability to explain the financing decisions among Ukrainian companies in practice. The concept of sufficient equity level was firstly applied for Ukraine in order to explore the relationship between equity capital sufficiency and share price performance. Particularly important is that the empirical evidence on the impact of capital structure on company performance in the conditions of Ukrainian market is found as a result of this research. The most appropriate capital management strategy, which facilitates the improved profitability and better market performance for Ukrainian companies under the present conditions, was identified. The current study is practically significant, since it offers a useful insight for company owners, managers as well as equity market investors in Ukraine based on the empirical evidence regarding the capital structure decisions and their influence on performance of domestic enterprises. Understanding the relationship between leverage and corporate performance will enable managers to improve their financing decisions as well as investors to allocate their funds more effectively. The thesis is organized as follows. The Analytical Part reviews the importance and complexity of capital structure decisions in practice, as well as peculiarities and conditions of financing decision-making in Ukraine. The link between theory and practice of capital structure decisions, and the contradictions in financing behaviour across developed and developing countries are explored. Following, the Theoretical Part is dedicated to the analysis of scientific literature on the issue. In order to understand the rationale behind the impact of capital structure on company performance, the most prominent capital structure theories as well as recent empirical studies were reviewed and summarized. Then, the Scientific and Practical Part describes the research methodology, conceptual framework, and data used in the study. The correlation and regression analyses were applied to estimate the impact of leverage and equity sufficiency on profitability and stock performance. Results of the empirical research and their interpretation are presented. Finally, based on obtained findings, the relevant inferences, proposals and areas for further research were provided in the concluding part.
Keywords Capital structure, debt, equity, leverage, firm performance, profitability, stock performance.
Keywords in English Capital structure, debt, equity, leverage, firm performance, profitability, stock performance.
Language eng
Year 2016
Date and time of uploading 25.05.2016 17:29:49