Proceedings

estructuring process of the companies in Romania will take into account the turnover
for expressing dimension.
The econometric models are linear regressions regarding the parameters, but not
compulsory regarding the variables. Logarithms of variables, those dependent or the
explanatory or both categories, allows the performance of classical linear regression
model assumptions. Thus the determination will be made using the logarithm scale
turnover.
Profitability is negatively correlated with the financial leverage, according to the
pecking order theory hypothesis, in which companies turn to borrow capital only
when internal sources are insufficient. According to the information asymmetry
theories, the financing policy is a corporate performance indicator. The higher the
financial leverage, the better the company will be perceived as more performing, and
the confidence regarding the manager will be higher. We use the return on operational
income to total assets rate (ROIA) to express profitability, calculated as follows:
Net operating income
ROIA = (1)
Total assets
Because tangible assets can be used as collateral for obtaining loan resources, a
significant share of them may be associated with a high degree of financial leverage,
reflecting a positive correlation. Rate of tangible assets is determined as follows:
where:
R ta
TA – total assets
IA – intangible assets
FA - financial assets
TA − IA − FA
= ∗100
(2)
TA
Companies with growth opportunities should have a low financial leverage, Myers
arguments that an excessive level of leverage may determine companies to avoid
profitable investment opportunities. Consequently, there is a negative correlation
between growth opportunities and financial leverage. (Fama & French, 2002). To
determine the growth opportunities we will consider the relationship between market
value and accounting value of shares (market-to-book ratio):
Share price
MBR = (3)
NAS
where NAS represents the accounting net asset per share and is calculated as:
Total assets − Total debt
NAS = (4)
Number of shares
Using the above variables we can set a pool type econometric model with the
following equation:
y i, t = αi
+ β1
∗x
i, t + εi,
t
(5)
The reasons for choosing such a model were related to relatively short time span and
presentation of data, where the observations of a variable being grouped together but
presented separately from the observations of the other variables (unstacked data). For
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