| Abstract [eng] |
SUMMARY VILNIUS UNIVERSITY BUSINESS SCHOOL SUSTAINABLE FINANCE & INVESTMENTS STUDY PROGRAMME MANTAS JONAS VILIMAS THE IMPACT OF CAPITAL STRUCTURE ON COST OF CAPITAL AND FIRM VALUE IN THE BALTIC STATES Supervisor – Antanas Laurinavičius doc. prof. dr. Master’s thesis was prepared in Vilnius, in 2025 Scope of Master’s thesis (project) – 69 pages. Number of tables used in the FMTP – 9 pcs. Number of figures used in the FMTP - 29 pcs. Number of bibliography and references - 62 pcs. The FMTP described in brief: The research is focused on determining whether capital structure is relevant and has an impact on cost of capital and company value specifically in the Nasdaq Baltic market. Understanding the factual relationship between financing decisions and these crucial variables is necessary for maximising shareholders' value and maintaining competitive advantage. Given the region’s growing integration into international financial markets. Problem, objective and tasks of the FMTP: Thesis addresses the central problem of whether an entity’s capital structure exerts a significant influence on its cost of capital and its market value within the specific context of the Baltic States' financial environment. The objective is to examine listed companies on the Nasdaq Baltic market to empirically assess this influence. This was achieved by synthesizing the theoretical development of capital structure models, developing a thorough empirical methodology using suitable econometric and diagnostic approaches, and carrying out a thorough analysis to produce results and recommendations that could be put into practice. Research methods used in the FMTP: A wide range of methods, including bibliometric analysis, regression analysis was applied. Research and results obtained: Panel data regression was applied in this study's empirical analysis of Nasdaq Baltic listed companies. The results confirmed that profitability (ROA) is the dominant factor reducing the cost of capital and increasing firm value, while the impact of financial leverage had relationship only with cost of capital rather than the value of the entity. Firm size and growth exhibited different results from the primary hypotheses. Conclusions of the FMTP: It was concluded that the Pecking Order Theory in the Baltics is validated by obtained results on profitability, i.e., higher profitability leads to lower WACC and Tobin Q. Although leverage decreases WACC because of the tax shield; however, it does not affect company value by creating size paradox, where firm with large asset balance is penalised with a lower Tobin Q. Information about the publication of FMTP results or adaptation for publication: The results obtained can be used to determine if listed entities in the Baltic States have a well-balanced capital structure, which could result in a decrease of capital cost and an increase in shareholder value. |
