Determinants of European telecom operators' capital structure

Authors:
Open Access
Publisher website
Google Scholar
Abstract
In recent years, the telecommunications services sector has made a remarkable contribution to the global economy, thereby attracting the interest of researchers. This study aims to examine the relationship between total leverage and its main components (short-term and longterm leverage) and firm-specific and country-specific factors affecting the capital structure of European telecom operators during 2009-2020. The observed period, beginning right after the world economic crisis in 2008, was characterized by a stable economy and the expansion of mobile communications, and the Internet and multimedia services. We used dynamic panel regression models with 9 explanatory and three dependent variables and concluded that liquidity, profitability, sales growth, assets turnover, cost of debt, and non-debt tax shield had a significant influence on the capital structure of European telecom operators. We found that total leverage and long-term leverage significantly depend on their previous year's values. Tangibility, size of firm, and country GDP growth rate were not significantly associated with the capital structure of telecom operators within the observed period. The findings about a dominant negative impact of liquidity and profitability, and the positive impact of sales growth on leverage, are in line with the postulations of the pecking-order theory. This study can be helpful to managers and other stakeholders in improving their understanding of the factors affecting the capital structure of telecom operators.

This publication has 41 references indexed in Scilit: