An empirical examination of the resource and capital structure of non-financial firms in Hungary, 1995-2003
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The article tackles one of the most exciting problems in corporate finance: the internal and external factors affecting the formation of the resource and capital structure of firms. This structure altered drastically in non-financial incorporated firms in Hungary between 1995 and 2003. The proportion of own capital in long-term resources was significantly and steadily reduced, while that of short-term outside resources increase disproportionately. Meanwhile there was a marked fall in the proportion of registered and equity capital and reserved increased several times over. There was a marked increase in short-term external resources within the entire resource structure, notably in the proportion of bank funding, causing increased short-term indebtedness in the corporate sphere. The database examination confirmed that the financial indices describing these tendencies in resource and capital structure correlate very closely with returns on own capital, invested capital, and assets, and with the profitability of firms. It can be stated based on the findings that the firms have pursued a financing policy in line with owner interests.
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