University of Twente Student Theses


Capital structure and firm performance across the corporate life cycle of German listed firms

Rossum, Mycha van (2022) Capital structure and firm performance across the corporate life cycle of German listed firms.

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Abstract:The capital structure of a firm will influence its performance. Companies that are in the growing stage might not have adequate capital to fund their activities. For this reason, they might resolve to debt to be able to finance their day-to-day activities. However, other corporations might prefer to calculate debt so that they can pay less on taxes. For some organizations, equity is preferred over debt. These differences between companies make them rather unique and introduce all the noticeable differences among firms. This paper investigates the capital structure and firm performance during the corporate life cycle of German-listed firms. Different firms in diverse Growth stages are compared to determine how they interact with the market. Factors that also manipulate performance are taken into consideration and discussed. Various research work from multiple individuals is considered, and their findings are incorporated in this study to help shed clarify on the capital performance of German-listed firms. The major finding of this study is that the capital structure has a definite influence on a company's performance, which confirms the assumption of the agency costs theory. Furthermore, corporate life cycle stages do impact the relationship between capital structure and firm performance.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
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