Research on Corporate Indebtedness Determinants: A Case Study of Visegrad Group Countries

Abstract

Debt financing is arguably the most important source of external financing for enterprises and has become popular in recent years. Corporate debt is related to the monitoring of corporate indebtedness, which is a necessary part of evaluating the overall financial performance of an enterprise and will occur if an enterprise does not have enough equity. However, rising indebtedness can be a difficult financial situation for enterprises in the form of default and an inability to meet their emerging liabilities. The main aim of this paper is to perform a debt analysis of enterprises operating in the Visegrad Group countries and subsequently examine whether firm size and legal form have a statistically significant impact on selected indebtedness indicators. Firstly, it was necessary to perform a debt analysis using 10 debt ratios. Subsequently, the nonparametric Kruskal–Wallis test was used to perform a more detailed analysis focused on examining statistically significant differences in individual indebtedness ratios based on firm size and legal form. Bonferroni corrections were applied to detect where stochastic dominance occurred. The Kruskal–Wallis test results reveal statistically significant differences in debt ratios in Visegrad Group countries, confirming the impact of firm size and legal form on calculated debt ratios. Recognizing the impact of several determinants on corporate debt is critical because these firm-specific features may be interpreted as proxies for default probability or the volatility of corporate assets, which may simplify the decision-making processes of creditors and stakeholders.

Keywords

• indebtedness
• indebtedness indicators
• firm size
• legal form
• analysis of variance
• Visegrad Group countries