Capital structure and firm performance, Empirical paper exploring the impact of capital structure on firm performance over time in the Swedish real estate market

Sammanfattning: We have conducted an empirical study on the effects of capital structure on firm performance over time in the real estate market in Sweden. The market is characterised as a capital intense market, but has suffered with loan restrictions after previous crises. Using data from listed firms on the OMX stock exchange, we have found a positive correlation between capital structure and firm performance overall. The correlation is increasingly positive over time, meaning that capital structure has a larger impact on firm performance in latter years. During times of financial turmoil, however, the correlation is either negative or statistically insignificant. Despite the increasingly positive correlation, debt levels are decreasing over time. This reluctance towards debt can be seen either as sign of market imperfections or as a sign of firms reaching their optimum debt level, as stated in the trade-off theory.