Non-linear Panel Data Analysis for Capital Structure and Its Impact on Profitability

This paper intends to establish the determinants of financial performance in 125 companies listed on the Bucharest Stock Exchange, over the 2003-2012 period. The analysis is based on descriptive analysis, linear and non-linear regression analysis. Return on assets, as performance proxy, is regressed...

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Bibliographic Details
Published in:The review of finance and banking 2016-06, Vol.8 (1), p.21-36
Main Author: Vatavu, Sorana
Format: Article
Language:English
Subjects:
Balance sheets
Capital structure
Corporate finance
Corporate profits
Data analysis
Economy
Equity
Financial Markets
Financial performance
Funding
Profitability
Ratios
Shareholders equity
Stock exchanges
Stock market delistings
Stockholders
Studies
Taxation
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Summary:This paper intends to establish the determinants of financial performance in 125 companies listed on the Bucharest Stock Exchange, over the 2003-2012 period. The analysis is based on descriptive analysis, linear and non-linear regression analysis. Return on assets, as performance proxy, is regressed on endogenous and exogenous variables. Results indicate that Romanian companies register higher returns when they operate with limited borrowings. Tangibility has a negative impact on return on assets, as long as investments are made from internal funds, affecting the level of earnings over short-term. The current financial crisis affects corporate performance, while inflation rates induce a loop effect in returns along with their fluctuation
ISSN:2026-2713
2067-2713
2067-3825