DRIVERS OF FINANCIAL BEHAVIOUR: ARE THERE DIFFERENCES BETWEEN THE EU COUNTRIES

The aim of this paper is to examine whether there are statistically significant differences in the capital structure determinants between the firms operating in the three top and three lowest performing EU countries, where the countries in sample were selected based on their average real GDP per capita. These countries clearly differ in their levels of economic development, but also in terms of financial system, efficiency of institutional governance, legal protection and overall macroeconomic conditions. Accordingly, this seems as a useful framework to study if there are some firm-specific determinants of capital structure that systematically influence firms' financial behaviour, regardless of their development status. The analysis is conducted on more than 30 000 medium, large and very large non-financial companies from the following countries: Luxembourg, Ireland, Denmark, Latvia, Romania and Bulgaria. For the period 2009 - 2017, using static panel fixed effects model, we test the influence of selected firm-specific determinants on the three models of financial leverage: total, long- and short-term debt. Results on the total sample indicate that all the analysed determinants (i.e. size, profitability, asset tangibility, non-debt tax shield, liquidity and operating leverage) have statistically significant impact on total and long-term debt, while size, profitability, liquidity and non-debt tax shield are significant also for short-term debt. However, there are significant differences in the impact of these determinants depending on country subsamples, not only in strength but also in the direction of impact. Such results suggest the need for further study of macroeconomic and other variables that potentially cause different financial behaviour of the analysed companies.