Capital Structure and Company Performance: Evidence From Serbian Manufacturing Listed Companies

Abstract

The study includes an examination of the effects of capital structure indicators, mainly indebtedness, on the company's financial performance. Companies from the manufacturing sector are listed on the Belgrade Stock Exchange as part of the BelexLine stock market index and covering the period from 2006. to 2022. were used as a sample. Indicators of return on assets (Roa) and return on capital (Roe) were selected as dependent variables. In the case of independent variables that present the capital structure, indicators of short-term, long-term, and total debt were used. Size and age variables were also used in the study. The results indicated a negative effect of total and short-term debt on the performance of manufacturing companies, while the indicator of long-term debt indicated a positive effect. The findings serve as a complement to the existing literature on the topic of capital structure, as well as to support financial management in better understanding the effects of indebtedness on the profitability of companies.