Title: Relationship between economic performance and capital structure: some empirical evidence

Authors: Pietro Pavone

Addresses: Department of Political Science, University of Naples Federico II, Via Rodinò 22/a, 80138, Naples, Italy

Abstract: This paper investigates the relationship between corporate financial choices and economic performance. The analysis concerns a sample of Italian companies in the construction sector in the period 2008-2017. Descriptive statistics, correlation and regression are used to analyse the data. Return on equity (ROE), ROA and ROI are used as measures of company performance; short-term debt, long-term debt, and total debts are used as independent variables. The findings of the study show that short-term debt has a positive and statistically significant effect on the ROI of real estate development companies, while it has a negative and statistically significant effect on the ROE of construction companies. The study also shows a positive and significant relationship between long-term debt and the ROI of real estate project development companies and between total debt and the ROE of construction companies.

Keywords: construction sector; economic performance; capital structure; ROE; return on equity; ROA; return on asset; ROI; return on investment; short-term debt; long-term debt; total debts.

DOI: 10.1504/IJBAF.2022.127074

International Journal of Behavioural Accounting and Finance, 2022 Vol.6 No.4, pp.296 - 310

Received: 25 Mar 2021
Accepted: 23 Jan 2022
Published online: 21 Nov 2022 *