Conference paper
https://doi.org/10.2478/zireb-2019-0024
Analyzing Capital Structure across Industries: Evidence from Croatia
Bisera Karanović
orcid.org/0000-0002-9634-9447
; Business School PAR, Rijeka, Croatia
Gordana Nikolić
; Business School PAR, Rijeka, Croatia
Goran Karanović
orcid.org/0000-0002-6515-935X
; Faculty of Tourism and Hospitality Management, University of Rijeka, Opatija, Croatia
Abstract
Capital structure refers to the delicate balance between equity and debt that a company
uses to finance its assets. It is typically expressed as a debt-to-equity or debt-to-capital ratio, with the components usually located on the right side of the company’s balance sheet. Capital structure can exert great influence on the company’s risk profile and ability to leverage its operations. For this reason, the authors conducted an investigation of the capital structure of 16 joint stock companies listed on the Zagreb Stock Exchange comprising CROBEX, the equity index of Croatia for a three-year period starting in 2015 and ending in 2017. The study demonstrates that many CROBEX-listed companies are very risk averse and choose to remain debt-free. Some are, however, starting to discover the potential offered by financial leverage and have slowly started adjusting their capital structure. In conclusion, capital structure is slowly becoming an issue worthy of discussion on the corporate agendas in Croatia.
Keywords
Capital structure; Debt ratio; Leverage; Financial analysis; Croatia
Hrčak ID:
233752
URI
Publication date:
5.2.2020.
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