An agency theory approach on Romanian listed companies’ capital structure

Abstract

Capital structure is one of the most studied thematics in corporate finance because of its strong dependencies with companies’ performance. Literature provides various theories trying to explain capital structure and financing decisions. Agency theory treats the subject from a principal-agent approach. Diverging interests of these two decisional factors can explain the financing decisions taken by companies where other capital structure’s theories fail. Testing agency theory implications against a sample of Romanian listed companies will show whether this theoretical concept provides empirical results in an emerging market with developing capital market.

Keywords

• agency theory
• optimal capital structure
• stakeholder type
• equity
• leverage