Meta-study on relationship between macroeconomic and institutional environment and internal determinants of enterprises’ capital structure

• Main Authors: Jacek Jaworski, Leszek Czerwonka
• Format: Article
• Language: English
• Published: Taylor & Francis Group 2019-01-01
• Series: Ekonomska Istraživanja
• Subjects: capital structure; determinants of capital structure; financing of enterprises; macroeconomic and institutional environment; country-specific determinants
• Online Access: http://dx.doi.org/10.1080/1331677X.2019.1650653
• ISSN: 1331-677X; 1848-9664

The enterprise capital structure is influenced by internal factors, i.e., the share of fixed assets in total assets, the size and growth of the enterprise, its liquidity and profitability, and the non-debt tax shield. The literature shows that external factors – macroeconomic and institutional specifics of enterprises’ environment – may shape the strength and direction of these dependencies. The main aim of this article is to identify the relationship between external factors and the impact of internal determinants on the capital structure. The study includes the meta-analysis of papers which provide information on the relationship between internal factors and the capital structure for 35 countries. The study includes the papers published after 2000 whose research covered the period 1993–2017. A statistically significant relationship between four external factors (inflation, G.D.P. growth rate, G.D.P., index of protection of the creditors and debtors rights) and the strength and direction of the impact of internal factors on the capital structure has been found. In addition, the unambiguously negative impact of two internal factors (liquidity and profitability of the enterprise) on indebtedness was diagnosed. It also reveals that the pecking order theory constitutes a strong theoretical basis for research into the capital structure of enterprises.