Analysis of factors influencing financial leverage in Lithuanian listed companies

Abstract

The goal of the paper is to identify factors influencing financial leverage in Lithuanian listed companies. Factors influencing financial leverage have been analyzed in theoretical and empirical literature although there is now evidence of research of such type in Lithuania. Authors analyse theories explaining financial leverage and factors influencing financial leverage. Survey data include 2008-2012 year financial statements of 30 firms listed on the NASDAQ OMX Vilnius stock exchange. Methods used in this paper include comparative literature analysis, econometric and regression analysis and summarization of research data. The research allowed to confirm financial constraints (specifically, working capital) and a firm's industry as factors influencing financial leverage. Financial constraints impel companies to have higher financial leverage, and firms in the same industry are predisposed to change their financial leverage accordingly.