Internal Factors which Influence Capital Structure Choice of Albanian Firms

摘要

This paper attempts to study the influence of firm’s internal factors on capital structure decision for a sample of 69 non-listed firms, which operate in Albania, over the period 2008-2011. In this paper are used short-term debt to total assets (SDTA) and long-term debt to total assets (LDTA) as dependent variables and eight independent variables: return on asset (ROA), return on equity (ROE), tangibility (TANG), liquidity (LIQ), size (SIZE), business risk (RISK), flexibility (FLEX) and non-debt tax shields (NDTSH). The investigation uses cross-sectional time series data which are collected from the Balance Sheet Annual Reports, the official document delivered to the State Tax Office. This study found that ROA (net income to total assets), ROE (net income to equity), tangibility (the ratio of fixed assets to total assets) and liquidity (the ratio of current assets to current liabilities) have a significant impact on both SDTA and LDTA. While size, risk, flexibility and non-debt tax shields resulted statistically significant in determining only LDTA.