Proceedings

CONCLUSIONS
There is no universal theory of capital structure, and no reason to expect one. There
are useful conditional theories, however. The theories differ in their relative emphasis
on the factors that could affect the choice between debt and equity These factors
include agency costs, taxes, differences in information, and the effects of market
imperfections or institutional or regulatory constraints. Each factor could be dominant
for some companies or in some circumstances, yet unimportant elsewhere.
Financing policy for Romanian companies is based on debt financing, with a level of
indebtedness which varies between 60-70%, except companies listed on the first
category at BSE for which the indebtedness varies between 30-40%. The explication
for these differences in results is explained by main criteria for listing at the first
category at BSE: the value of equity must be more than 30 million Euros, Romanian
capital market having a small number of companies with such volume of financial
resources.
However, the results achieved in the case study, did not show that higher borrowing
by companies in Romania was a hazardous activity very risky or undisciplined. The
existence of a high degree of financial leverage is explained by the importance of
using financial resources for the acquisition of current assets, the lack of equity and
fiscal policy.
The purpose of this study was to provide some empirical evidences on the linkage
between company’s capital, as it is this reflected by the financial leverage, companylevel
factors that affect capital structure. In a linear simple regression model, we
found a negative correlation between financial leverage, return on operational income
to total assets or growth opportunities and a positive correlation between financial
leverage, the rate of tangible assets or turnover.
Of course this study have several limits both on conceptual as well as on empirical
level. Among this:
1. The use of return of operating income to total assets ratio instead of EBIT on
total sales ratio. The main reason for such substitution is connected to the real
sectors ‘prices rigidities and slow adjustments mechanism in an inflationary
environment. Thus, we had considered that the total assets reflect better the
output of the company’s operational activities.
2. The short-time span considered, the limited numbers of traded companies
included the absence of split by sectors, the absence of any references to the
inter-correlation between stocks as well as between stocks and global market
dynamic, some robustness of the estimated coefficient problems revealed by
the existence of certain autocorrelations in estimation residuals etc.
Despite the resulted caveats, we are identifying the similar trends between Romanian
companies and companies from other emerging countries, regarding the financial
leverage and company-level factors and further investigation are relevant for a better
understanding of capital structure formation mechanisms.
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