Relationship between economic performance and capital structure: some empirical evidence

This paper investigates the relationship between corporate financial choices and economic performance.The analysis concerns a sample of Italian companies in the construction sector in the period 2008-2017.Descriptive statistics, correlation and regression are used to analyse the data.Return on equity (ROE), ROA and ROI are used as measures of company performance; short-term debt, long-term debt, and total debts are used as independent variables.The findings of the study show that short-term debt has a positive and statistically significant effect on the ROI of real estate development companies, while it has a negative and statistically significant effect on the ROE of construction companies.The study also shows a positive and significant relationship between long-term debt and the ROI of real estate project development companies and between total debt and the ROE of construction companies.