*4.2. The Outcomes of Panel Data Regression Models*

After analyzing the influence of the variables, placed in different models, on the three dependent variables, we can say whether we accept or reject the hypotheses that have been initially formulated. Based on the outcomes out of Table 5, the working capital and the inflation rate variables have a statistically negative but insignificant relationship with the dependent variables. The first hypothesis states that there is a positive relationship between the size of the company and the indebtedness rates, the results of the regressions showed that there is a negative relation, so we can conclude that we reject H1. The second hypothesis states that there is a positive relationship between tangibility of assets and indebtedness rates, the results of the regressions showed that there is a positive relation with the total indebtedness rate and with the long-term indebtedness rate, and negative with the long-term indebtedness rate in short, so we can accept H2.

The third hypothesis argues that there is a negative relationship between growth opportunity and debt, results of regressions showing that growth opportunity is in a positive relationship with the total and long-term debt ratio, and a negative relationship with the short-term one. In short, we can reject H3. The fourth hypothesis states that there is a negative relationship between liquidity and debt while the results of the regressions have shown that there is a negative relationship with all three rates, thus H4 is accepted. Hypothesis 5 states that there is a positive relationship between the effective tax rate and indebtedness, the results of the regressions showed that there is a negative relationship, thus, H5 is rejected. Theoretically, a company that has a high effective tax rate will benefit, by contracting debts, from maximizing the tax deduction. In our case, the negative relationship can be explained by the fact that companies with long-term debt have a reduced effective rate.

The sixth hypothesis argues that there is a negative relationship between financial return and debt, the coefficient came out negative in relation to all debt rates, so H6 can be accepted. The negative coefficient of ROE underlines that the debt rate decreases as profitability increases, so companies follow the theory of hierarchical financing sources, using profit first to finance operations, and then debt. The following hypothesis states that there is a negative relationship between the rate of inflation and debt. The coefficient came out negative in relation to the total and long-term debt rate, and positive to the short-term debt rate, so we can accept H7. Hypothesis 8 states that there is a negative relationship between the annual interest rate and debt, the results of the regressions showed a positive relationship, so H8 is rejected.


**Table 5.** Estimated coefficients for all three models.

Source: Author's own computation. \*\*\*, \*\*, \* denotes statistical significance at the 1%, 5%, and 10% significance level, respectively.

Hypothesis 9 argues that there is a positive relationship between the gross domestic product per capita and debt, the results of the regressions showed a negative relation with all the three rates of debt, so H9 is rejected. The latter hypothesis argues that there is a negative relationship between governance and debt indicators. The audit, remuneration and nomination committees are in a negative relationship with all three indebtedness rates, so H11, H12 and H13 are accepted. The status of the CEO is in a positive relationship, so Hypothesis 14 is rejected. Between board size and debt ratio is a positive relationship, H10 is rejected. The presence of the audit committee in the company structure signifies an efficient control of internal processes and activities, as well as combating information asymmetry, resulting in the reduction of agency costs. The presence of the nomination committee in the organizational structure of the company helps to nominate capable people in the management structure, who take decisions that do not lead to increasing debt when looking for alternative funding sources. The presence of the remuneration committee can lead to effective decisions to motivate and ambition the board directors so that they can run the company efficiently without suffocating it in debt. The CEO's status is in a positive relationship with the dependent variable, the fact that the CEO is or is not the president, has an impact on the debt.

The Prop variable which measures the size of the company and is calculated as a natural logarithm of the turnover, is in a significantly negative relation with the indebtedness rates and respects the principles of pecking order theory. Thus, with the increase in size, the company will use in the first phase, as a source of financing, its own earnings. Depreciation is in a positive and significant relationship with the long-term and total indebtedness rate and in an insignificant relationship with the short-term indebtedness rate. Price to book value has a significant negative impact on indebtedness rates, so when this indicator increases, it means that the value of the market shares compared to the book value increases, and the investments will be financed by the shareholders, which leads to the reduction of bank loans. The size of the market, a variable calculated as a ratio between market capitalization and gross domestic product, is in a positive and significant relationship with the total indebtedness rate, respectively with the short term rate, suggesting that easy access on the market to financial sources, information, etc., allows companies to access new sources of external financing, such as the issue of shares or bank loans. The more developed the market, in our case, the technology services and information industry, the more the companies are inclined to turn to external sources to support their short-term operations. In relation to the long-term debt ratio, a statistically insignificant relationship resulted. Price to earnings ratio is in a statistically negative and significant relationship with all three debt ratios. Thus, when a company borrows from banks, for example, it will have to pay interests, and this will lead to a decrease in the net result of the firm, and implicitly of the PER. It is also true that depending on what purpose the debt is made, if it is done with the purpose of making a strategic investment, acquiring another company for example, this will have a positive influence on the PER. The duration of the stock rotation has a positive coefficient, but it is insignificant, except for the short-term debt ratio, in relation to which it is in a significant relationship. A positive relationship between this and the dependent variable can be explained by the fact that a longer duration of stock exit means that the sales are not very high and the company has to borrow in order to support its expenses.
