THE RELATIONSHIP OF CORPORATE GOVERNANCE DECISION ON CAPITAL STRUCTURE AND COMPANY’S PERFORMANCE: EVIDENCE FROM LITHUANIAN FOOD AND BEVERAGES INDUSTRY COMPANIES

Rasa Norvaišienė, Jurgita Stankevičienė

Abstract


Capital structure is the problem regularly approached in theoretical and empirical studies; however it does not give any consensus whether the growing use of loan capital leads to increase or decrease in the efficiency of company’s performance. Many of the empirical researches evidenced that the capital structure has a significant negative impact on the efficiency of corporate performance; some studies showed a positive relationship. The results of our research confirmed the results of first studies: all the selected ratios of capital structure negatively correlated with the efficiency of the company's performance. Since it was established a significant relationship, we conclude that the performance efficiency is related to debt level to a large extent. Moreover, the capital raised in this way did not condition more effective performance and is not associated with the implementation of fast-track, profitable projects, that would allow these companies to ensure the growth of performance efficiency.

DOI: http://dx.doi.org/10.5755/j01.em.17.2.2170


Keywords


signaling theory; corporate governance; capital structure; company’s performance

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Print ISSN: 1822-6515
Online ISSN: 2029-9338