Lenka Strýčková

Department of Finance and Accounting,

Technical University of Liberec, Czech Republic

lenka.stryckova@tul.cz

Debt policy of companies in Czech Republic

Abstract. The attitude of companies towards the use of debt depends on many factors that can be generally called corporate debt policy. This paper deals with the debt policy of companies in Czech Republic, focusing on the factors affecting the appropriate amount of debt and their debt policy in general. The aim of this contribution is to reveal the dominant factors affecting companies in their debt policy decisions and to analyse the possible impact of the selected classifying factors on the firms’ responses. The findings of this article are based on the data from the questionnaire survey conducted in 2016 and the subsequent statistical analysis of the responses. The most important factors affecting appropriate amount of debt proved to be financial flexibility and volatility of earnings and cash flows. For deciding on debt policy, the most important factor was insufficiency of internal funds. Statistical analysis revealed several differences in response to debt-policy questions according to the legal form of business, the industrial sector, the company size, and the origin of capital.

Received: February, 2019

1st Revision: April, 2019

Accepted: September, 2019

DOI: 10.14254/2071-8330.2019/12-3/15

JEL Classification: G32

Keywords: Czech Republic, debt policy, capital structure determinants, company, financing