Modelling of capital structure in relation to business performance maximization
-
DOIhttp://dx.doi.org/10.21511/imfi.15(2).2018.26
-
Article InfoVolume 15 2018, Issue #2, pp. 292-304
- Cited by
- 2350 Views
-
384 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
The aim of the article was to find out the optimal capital structure of the companies in relation to their maximum performance. To reach this aim, the data of the companies operating in the field of heat industry of the Slovak Republic were used. As the first method, a correlation matrix was applied. It was found out that there is statistically significant relationship between capital structure indicators and performance of the companies. Due to the lack of data in time series, the authors were not able to apply multiple regression model to assess the impact of these indicators on performance. Therefore, a method of modelling was used to analyze the impact of the change in capital structure on performance. Modelling was based on the principle of a gradual change in the capital structure in favor of debt. By the increase in debt, it was confirmed that there was a change in the values of selected indicators. In the course of analysis, it was confirmed that the value of EVA equity increased with the rising indebtedness by which the proposition I of the modified MM theory was supported. The performance expressed by EVA entity indicator is at its minimum when the capital structure is 90:10 in favor of equity. By increasing the debt, EVA entity rises. Based on these results, it can be stated that the performance of selected companies increases when the share of debt also rises, even when taking into account the rising financial risks.
- Keywords
-
JEL Classification (Paper profile tab)G32, C53, M21
-
References38
-
Tables2
-
Figures6
-
- Figure 1. Development of the cost of equity following the change in capital structure
- Figure 2. Development of weighted average capital cost following the change in capital structure
- Figure 3. Development of the EVA equity indicator following the change in capital structure
- Figure 4. Development of the EVA entity indicator following the change in capital structure
- Figure 5. Development of spread following the change in capital structure
- Figure 6. Development of return on equity
-
- Table 1. Values of EVA equity and EVA entity (EUR)
- Table 2. Correlation matrix
-
- AMO SR (2013). Functioning of heat energy sector in Slovakia focusing on DH systems from the AMO point of view.
- Bartošová, V. (2005). Optimalizácia finančnej štruktúry podniku [Optimization of Business Financial Structure]. Žilina: EDIS.
- Bevan, A. A., & Danbolt, J. (2002). Capital structure and its determinants in the UK – a decompositional analysis. Applied financial economics, 12(3), 159-170.
- Cohen, J. (1998). Statistical power analysis for the behavioral sciences. Hillsdale, NJ: Lawrance Earlbaum Associates.
- Damodaran, A. (2014). Equity Risk Premiums: Looking backwards and forwards...
- EFQM (1999). Excellence Model.
- Fibírová, J., & Šoljaková, L. (2005). Hodnotové nástroje řízení a měření výkonnosti podniku [Value Tools to Manage and Measure Business Performance]. Praha: ASPI, a.s.
- Frost, W. (2005). ABCs of Activity Based Management – Crushing Competition Through Performance Improvement. Bloomington: iUniverse LLC.
- Gleason, K. C., Mathur, L. K., & Mathur, I. (2000). The Interrelationship between Culture, Capital Structure, and Performance: Evidence from European Retailers. Journal of Business Research, 50(2), 185-191.
- Harumová, A. et al. (2008). Stanovenie hodnoty majetku [Determination of the Value of the Assets]. Bratislava: Iura Edition.
- Horváthová, J., & Mokrišová, M. (2017). Capital Structure Modelling and Analysis of its Impact on Business Performance. Financial Assets and Investing, 8(2), 19-36.
- Hrdý, M., & Horová, M. (2007). Aktuální problémy strategického finančního řízení podniků v ČR [Current Problems of Strategic Financial Management of Businesses in the Czech Republic]. E+M Ekonomie a Management, 10(4), 80-86.
- Hudec, O. et al. (2007). Štatistické metódy v ekonomických vedách [Statistical Methods in Economic Sciences]. Košice: elfa, s.r.o.
- Jánošová, V. (2008). Zdroje financovania podniku [Sources of Business Financing]. Bratislava: Ekonóm.
- Johnson, G., & Kevan, S. (2000). Cesty k úspešnému podnikaniu [Ways to a Successful Business]. Praha: Computer Press.
- Krishnan, M., & Moyer, R. C. (1997). Performance, Capital Structure and Home Country: An Analysis of Asian Corporations. Global Finance Journal, 8(1), 129-143.
- Mařík, M., & Maříková, P. (2005). Moderní metody hodnocení výkonnosti a oceňování podniku: ekonomická přidaná hodnota, tržní přidaná hodnota, CF ROI [Modern Methods of Business Performance Evaluation: Economic Value Added, Market Value Added, CF ROI]. Praha: Ekopress.
- MHSR (2014). Návrh energetickej politiky Slovenskej republiky [Energy policy of the Slovak Republic].
- Modigliani, F., & Miller, K. H. (1958). The Cost of Capital, Corporation Finance and the Theory of Investment. American Economic Review, 48(3), 261-297.
- Myers, S. C., & Majluf, N. F. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of financial economics, 13(2), 187-221.
- Neumaierová, I., & Neumaier, I. (1996). Úvaha o optimální zadluženosti [Determining the Optimal Level of Indebtedness]. Finance a úvěr, 46(1), 51-61.
- Neumaierová, I., & Neumaier, I. (2002). Výkonnost a tržní hodnota firmy [Performance and Market Value of a Company]. Praha: Grada Publishing.
- RUZ (2017). Register účtovných závierok [Register of Financial Statements].
- Sedláček, J. (2009). Finanční analýza podniku [Financial Analysis of a Business]. Brno: Computer press, a. s.
- Sedláček, M., Suchánek, P., & Špalek, J. (2012). Kvalita a výkonnost průmyslových podniků [Quality and Performance of Industrial Businesses]. Brno: Masarykova univerzita.
- Sivák, R., & Mikócziová, J. (2009). Teória a politika kapitálovej štruktúry podnikateľských subjektov [Business Capital Structure Theory and Policy]. Bratislava: Sprint dva.
- Sheik, N. A. (2013). The impact of capital structure on performance: An empirical study of non-financial listed firms in Pakistan. International Journal of Commerce and Management, 23(4), 354-368.
- Souček, Z. (2010). Firma 21. století: (Předstihněme nejlepší!!!) [Business of the 21st Century: (Let’s Overtake the Best!!!)]. Praha: Professional Publishing.
- Suchánek, P. et al. (2013). Vliv kvality na výkonnost a konkurenceschopnost podniku [The Impact of Quality on Business Performance and Competitiveness]. Brno: Masarykova univerzita.
- Synek, M. et al. (2003). Manažerská ekonomika [Managerial Economics]. Praha: Grada Publishing.
- Šulák, M., & Vacík, E. (2005). Měření výkonnosti firem [Measurement of Business Performance]. Plzeň. Západočeská univerzita.
- Valach, J. (2001). Investiční rozhodování a dlouhodobé financování [Investment Decision Making and Long-term Financing]. Praha: EKOPRESS.
- Veber, J. (2004). Nové prístupy managementu – II. Část [New Management Approaches – 2nd part]. Ekonomika a management podniku, 2(2), 6-19.
- Vlachynský, K. et al. (1999). Podnikové financie [Business Finance]. Bratislava: Vydavateľstvo Súvaha, spol. s.r.o.
- Vlachynský, K. et al. (2002). Podnikové financie [Business Finance]. Bratislava: Súvaha.
- Wagner, J. (2009). Měření výkonnosti [Performance Measurement]. Praha: GRADA Publishing.
- Závarská, Z. (2012). Manažment kapitálovej štruktúry pri financovaní rozvoja podniku ako nástroj zvyšovania finančnej výkonnosti [Capital Structure Management in Financing the Development of a Business as a Tool for Increasing Financial Performance]. Prešov: Prešovská univerzita.
- Zeitun, R., & Tian, G. G. (2014). Capital structure and corporate performance: evidence from Jordan. Australasian Accounting Business & Finance Journal, 1(3), 40-61.