CORPORATE INDEBTEDNESS: BANE OR BLESSING? EMPIRICAL EVIDENCE FROM THE CZECH REPUBLIC

This study focuses on the indebtedness of Czech companies and its development between the years 2006 and 2011, thereby contributing to an ongoing discussion on the corporate capital structure and its optimal form. The paper aims to provide up-to-date empirical evidence on the relationship between the leverage and corporate performance of selected companies from the Czech Republic within 14 major business sectors. The results of this study show that corporate leverage varies across industries, and confirms the impact of the global financial and economic crisis on the corporate indebtedness level. Furthermore, the findings indicate that, generally, financial leverage was associated with positive effects on corporate profitability in most business sectors.