Capital structure influence on firm’s financial performance : differences in public and private firms, evidence from the Netherlands

This paper investigates the influence of capital structure measured by total debt, long-term debt and short-term debt on private and public firm’s financial performance measured by ROA and ROE, and then checks if there is a difference between these relationships. Fixed effect regression was used to investigate the relationship. Capital structure was found to influence performance positively, except for short-term debts influence on ROA in the case of public firms and long-term debts influence on ROA in the case of private firms. There was no statistically significant difference found of the influence of the capital structure on performance between public and private firms, except for the influence of the long-term debt.