The Importance of Estimation Method Choice for the Analysis of the Determinants of Capital Structure– An Example of Poland

Abstract

When assessing the influence of selected factors on capital structure, the researcher has to choose the set of determinants taken into account, their operationalization and the estimation method for regression model. However, the results vary significantly when the model is estimated with ordinary least squares, fixed effects or generalized method of moments. This study compares the results of parameter and standard errors estimates for the capital structure determinants models. Lagged debt ratio and size have positive impact on debt ratio, while profitability, business risk and industry median debt ratio have negative impact on debt ratio for companies listed in Poland.