Archive of Journal - Financing

Financing – scientific magazine for economy

ISSUE 2023, No. 1, Article 4, Year of publication: 14, March, 2023
Analysis of the capital structure of listed jointstock companies on the emerging market


Miloš Grujić, PhD*; Dragan Janjić, MSc**; Aleksandar Todorović***

*The Pension Reserve Fund Of Republic of Srpska ad Banja Luka

**University Clinical Centre of the Republika Srpska

***University Clinical Centre of the Republika Srpska



At particular stages of their developmental cycle, corporations must seek external sources of financing. Such financing may be derived from internal sources, such as share issuances, or through external mechanisms such as bond issuances or loans from financial institutions. The crucial question that arises in this context pertains to the optimal ratio of debt and equity in financing, i.e., how a company’s optimal capital structure is determined. This conundrum centers on the appropriate structuring of a company’s balance sheet liabilities, specifically with regard to establishing an optimal ratio between equity and debt liabilities. This study entailed an examination of the annual financial reports of more than 650 non-financial jointstock companies listed on the Banja Luka Stock Exchange between 2011 and 2021. The primary research query under consideration was: “How do managers of listed joint-stock companies in the Republic of Srpska establish their capital structure?” The ratio of short-term debt to total indebtedness was utilized as the dependent variables in the model. Various fundamental business indicators were employed as independent variables, including return on equity, return on assets, fixed assets, current ratio, current assets to total assets, total debt to total capital, and firm size. The goal of this paper is to identify factors that are specific to companies operating within developing countries that exert a significant influence on decisions related to debt and financing, while also considering these factors in constructing an appropriate econometric model. The results of the investigation demonstrated that the variables with the most significant impact on the dependent variables (i.e., the ratio of short-term debt to total liabilities) were fixed assets/total assets and net profit/average equity (ROE). Conversely, other variables had a negative impact on the dependent variable. When the sample was divided into companies with majority public and majority private ownership, the conclusion was that in both types of companies, the ratio of fixed assets/total assets had the most significant impact, with return on assets exerting the lowest influence. However, other indicators had different impacts in the two types of companies.

Keywords: equity, liabilities, assets, regression analysis, capital structure.

DOI: 10.7251/FIN2301053G

Corresponding author: