Does Capital Structure Drive Profitability in the Energy Sector?
Abstract
:1. Introduction
2. Literature Review
3. Research Design and Method
3.1. Data and Sample Composition
3.2. Variables and Model
3.2.1. Dependent Variable
3.2.2. Independent Variables
3.2.3. Control Variables
Size and Age
Sector-Related Variables
Liquidity
Efficiency
3.2.4. Regression Model and Method
4. Results and Discussion
4.1. Descriptive Statistics
4.2. Regression Results
4.2.1. Model 1
4.2.2. Model 2
4.2.3. Model 3
4.2.4. Expected Signs versus Findings
5. Concluding Remarks
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Acknowledgments
Conflicts of Interest
References
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Data | 2015 | 2016 | 2017 | 2018 | 2019 | In Total | (%) |
---|---|---|---|---|---|---|---|
Country | |||||||
CZ | 94 | 133 | 262 | 222 | 122 | 833 | 30 |
HU | 77 | 128 | 131 | 117 | 112 | 565 | 20 |
SLO | 34 | 74 | 76 | 80 | 73 | 337 | 12 |
PL | 229 | 67 | 147 | 299 | 299 | 1041 | 38 |
in total | 434 | 402 | 616 | 718 | 606 | 2776 | 100 |
Sub-sector | |||||||
PROD | 293 | 257 | 423 | 532 | 435 | 1940 | 70 |
DT | 141 | 145 | 193 | 186 | 171 | 836 | 30 |
in total | 434 | 402 | 616 | 718 | 606 | 2776 | 100 |
Variables | Definition/Proxies | Expected Sign |
---|---|---|
Dependent | ||
ROA | Net profit to total assets | n.a. |
Independent | ||
Model 1: D/A | Total liabilities to total assets | – |
Model 2: LtD/A | Long-term liabilities to total assets | – |
Model 3: StD/A | Short-term liabilities to total assets | +/− |
Control Variables | Definition/Proxies | Expected Sign | |
---|---|---|---|
Size | Firm size | Proxied by natural logarithm of a firm’s assets | +/– |
Age | Firm age | The number of years since firm inception | +/– |
Sector | Sector | As a dummy variable, 0 for production, 1 for trade and distribution | |
Tang. | Asset structure (tangibility) | Fixed tangible assets (PPE—plant, property, and equipment) to total assets | +/– |
CR | Financiall iquidity | Current ratio, measured as current assets to current liabilities | +/– |
Slack | Financial slack | Available financial slack, measured as cash to assets (cash ratio) | +/– |
PA | Assets productivity | Sales revenues to total assets (total assets turnover) | + |
OPM | Operating profit margin | EBIT (earnings before interests and taxes) to sales revenues | + |
Variables | Whole Sample N = 2776 | PROD N = 1940 | DandT N = 839 | Difference in Sector Means | Wilcoxon Z-Test | p-Value | |||
---|---|---|---|---|---|---|---|---|---|
Mean | St.Dev | Mean | St.Dev | Mean | St.Dev | ||||
ROA | 5.99% | 0.1123 | 6.09% | 0.1068 | 5.74% | 0.1240 | 0.35% | −2.355 * | 0.019 |
D/A | 60.44% | 0.2716 | 61.23% | 0.2686 | 58.61% | 0.2776 | 2.62% | −2.080 * | 0.038 |
LtD/A | 31.30% | 0.3055 | 40.76% | 0.3045 | 9.34% | 0.1608 | 31.42% | −24.863 *** | 0.000 |
StD/A | 29.08% | 0.2724 | 20.41% | 0.2099 | 49.21% | 0.2936 | −28.81% | −24.548 *** | 0.000 |
Age | 14.27 | 9.7925 | 14.01 | 9.9764 | 14.86 | 9.3306 | −0.85 | −3.784 *** | 0.000 |
Tang. | 62.32% | 0.3144 | 73.21% | 0.2387 | 37.03% | 0.3233 | 36.18% | −25.174 *** | 0.000 |
CR | 3.24 | 6.0402 | 3.72 | 6.6923 | 2.13 | 3.9346 | 1.59 | −4.931 *** | 0.000 |
Slack | 11.12% | 0.1317 | 10.23% | 0.1190 | 13.19% | 0.1555 | −2.96% | −1.955 | 0.051 |
PA | 1.29 | 3.8492 | 0.56 | 0.9279 | 3.00 | 6.5642 | −2.44 | −28.373 *** | 0.000 |
OPM | 19.15% | 0.4590 | 26.36% | 0.4804 | 2.42% | 0.3524 | 23.94% | −22.975 *** | 0.000 |
ROA | D/A | LtD/A | StD/A | Size | Age | Tang. | CR | Slack | PA | OPM | |
---|---|---|---|---|---|---|---|---|---|---|---|
ROA | 1 | −0.191 *** | −0.076 *** | −0.098 *** | −0.098 *** | 0.018 | −0.038 * | 0.174 *** | 0.178 *** | 0.047 * | 0.394 *** |
D/A | 1 | 0.498 *** | 0.309 *** | 0.025 | −0.221 *** | −0.035 | −0.408 *** | −0.220 *** | 0.005 | 0.049 * | |
LtD/A | 1 | −0.549 *** | 0.018 | −0.155 *** | 0.489 *** | 0.123 *** | −0.195 *** | −0.236 *** | 0.159 *** | ||
StD/A | 1 | −0.006 | −0.005 | −0.465 *** | −0.665 *** | 0.026 | 0.223 *** | −0.149 *** | |||
Size | 1 | 0.299 *** | 0.086 *** | −0.090 *** | −0.315 *** | −0.091 *** | −0.014 | ||||
Age | 1 | 0.088 *** | 0.056 ** | −0.041 * | −0.115 *** | −0.018 | |||||
Tang. | 1 | −0.120 *** | −0.313 *** | −0.363 *** | 0.089 *** | ||||||
CR | 1 | 0.361 *** | 0.009 | 0.090 *** | |||||||
Slack | 1 | 0.141 *** | 0.044 * | ||||||||
PA | 1 | −0.048 * | |||||||||
OPM | 1 |
Variables | Model 1: D/A | Model 2: LtD/A | Model 3: StD/A | ||||||
---|---|---|---|---|---|---|---|---|---|
Coef. | Sig. | Coef. | Sig. | Coef. | Sig. | ||||
(Intercept) | −1.506 *** | 0.000 | −1.951 *** | 0.000 | −2.734 *** | 0.000 | |||
D/A | −0.321 *** | 0.000 | |||||||
LtD/A | −0.319 *** | 0.000 | |||||||
StD/A | 0.092 ** | 0.005 | |||||||
Age | −0.102 *** | 0.000 | 0.209 *** | 0.000 | −0.187 *** | 0.000 | |||
Size | 0.070 | 0.139 | 0.069 *** | 0.000 | 0.369 *** | 0.000 | |||
Sector | −0.166 *** | 0.000 | 0.178 *** | 0.000 | 0.042 ** | 0.003 | |||
Tang. | 0.000 | 0.984 | −0.086 *** | 0.000 | −0.354 *** | 0.000 | |||
CR | −0.138 *** | 0.000 | 0.248 *** | 0.000 | −0.114 ** | 0.006 | |||
Slack | −0.092 *** | 0.000 | −0.227 *** | 0.000 | 0.177 *** | 0.000 | |||
PA | 0.124 *** | 0.000 | 0.012 | 0.600 | 0.028 | 0.063 | |||
OPM | 0.561 *** | 0.000 | 0.547 *** | 0.000 | 0.653 *** | 0.000 | |||
R2 = 449 Adj. R2 = 447 F = 250.722 *** | R2 = 753 Adj. R2 = 752 F = 937.675 *** | R2 = 622 Adj. R2 = 621 F = 505.811 *** | |||||||
Variables | Expected Sign | Findings | |
---|---|---|---|
Independent Variables | |||
D/A | Capital structure (Financial leverage effect) | − | confirmed |
LtD/A | − | confirmed | |
StD/A | +/− | + | |
Control Variables | |||
Size | Firm size | +/− | inconclusive (b) |
Age | Firm age | +/− | inconclusive (a) |
Sector | Sector | +/− | inconclusive (b) |
Tang. | Asset structure (tangibility) | +/− | inconclusive (b) |
CR | Financial liquidity | +/− | inconclusive (a) |
Slack | Financial slack | +/− | inconclusive (a) |
PA | Assets’ productivity | + | inconclusive (b) |
OPM | Operating profit margin | + | confirmed |
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Wieczorek-Kosmala, M.; Błach, J.; Gorzeń-Mitka, I. Does Capital Structure Drive Profitability in the Energy Sector? Energies 2021, 14, 4803. https://doi.org/10.3390/en14164803
Wieczorek-Kosmala M, Błach J, Gorzeń-Mitka I. Does Capital Structure Drive Profitability in the Energy Sector? Energies. 2021; 14(16):4803. https://doi.org/10.3390/en14164803
Chicago/Turabian StyleWieczorek-Kosmala, Monika, Joanna Błach, and Iwona Gorzeń-Mitka. 2021. "Does Capital Structure Drive Profitability in the Energy Sector?" Energies 14, no. 16: 4803. https://doi.org/10.3390/en14164803