Proceedings

a more detailed approach on the influence of the four variables on financial leverage,
we have performed a sequential analysis of the model. In this regard, we have
considered possible combinations of the four variables: we analyzed those grouped
three and finally all four, the explicit form of the model being the following:
where:
FL = α + α ∗log(CA)
+ α ∗R
+ α ∗R
+ α ∗MBR
(6)
i, t
0
1
i, t
2
e i, t
~ 814 ~
3
at i, t
FL – financial leverage = Total debt/Equity capital
i – represents i company
t – represents the t moment
2.2. Description and result interpretation
To achieve a regression model that can explain the financing policy of the companies
listed on BSE, we considered a sample of 46 companies (the 22 from first category
and 24 from second category), for the period 2005-2009.
Next, we consider the analytical models under the influence of 3 of the 4 treated
factors. For the analysis model between the financial leverage (dependent variable),
the return on operational income to total assets, the rate of tangible assets and marketto-book
ratio (independent variables), the results are reflected in the following table:
Table 1. Relationship between FL, ROIA, TAR and MBR
Dependent variable: FL?
Method: Pooled EGLS (Cross-section weights)
Sample: 2005 2009
Number of included observations: 5
Crossed observations: 46
Total observations: 230
Weighted variables matrix as linear estimation in a single step
Variable Coefficient Std. Error t-Statistic Prob.
C 0.554361 0.230297 2.407161 0.0169
ROIA? -2.188050 0.735553 -2.974699 0.0033
TAR? 0.382838 0.227870 1.680071 0.0943
MBR? -0.042326 0.049410 -0.856640 0.3926
Weighted Statistics
R-squared 0.076028 Mean dependent var 3.122705
Adjusted R squared 0.063763 S.D. dependent var 3.385150
S.E. of regression 3.093244 Sum squared resid 2162.403
F-statistic 6.198701 Durbin-Watson stat 0.692769
Prob(F-statistic) 0.000459
Unweighted Statistics
R-squared -0.018004 Mean dependent var 1.345409
Sum squared resid 5308.495 Durbin-Watson stat 2.278699
(Source: authors’ own calculations generated by using the Eviews7 soft)
Since the standard error of the coefficient value is higher, in module, than the
coefficient`s value, the impact analysis model based on return on operational income
to total assets, tangible assets and market-to-book ratio is not valid.
4
i, t