Determinants of Capital Structure: The Evidence from European Energy Companies

Abstract

The main aims of this study are to determine the factors which affect capital structure of corporations operating in energy sector and to detect capital structure theories with which capital structure of energy sector companies would comply. In this context, a panel data analysis was performed on totally 79 European energy companies operated between the years 2009 - 2012. According to results of the study; diminishing leverage rate caused by increased liquidity in European energy companies can be explained with the Pecking Order Theory, while escalating leverage rate caused by increased tangible fixed assets or equity turnover would be defined with the Trade-off Theory.