Capital Structure, Ownership Structure and Firm Performance: Evidence from European Listed Energy Firms: Capital Structure, Ownership Structure and Firm Performance: Evidence from European Listed Energy Firms
Translated title
Capital Structure, Ownership Structure and Firm Performance: Evidence from European Listed Energy Firms
Authors
Rana, Srijana ; Prasai, Bidhya
Term
4. semester
Publication year
2026
Submitted on
2026-06-01
Pages
115
Abstract
This thesis investigates how capital structure (leverage) and ownership structure (type and concentration) relate to performance in publicly listed European energy firms. Using panel data on 104 firms across 23 countries from 2014 to 2024 (1,139 firm-year observations) spanning conventional, mixed, and renewable energy, the study draws on Trade-off Theory and Agency Theory and tests four hypotheses linking leverage, earnings volatility, ownership type, and ownership concentration to performance measured by return on assets (ROA) and Tobin’s Q. Two-way random effects panel regressions with firm-clustered standard errors are employed, and Driscoll–Kraay standard errors are reported as a robustness check to address detected heteroskedasticity, autocorrelation, and cross-sectional dependence. The results show a non-linear inverted U-shaped relationship between leverage and ROA, consistent with Trade-off Theory. Earnings volatility does not significantly moderate the leverage–performance relationship. Ownership type has no significant effect on ROA in the full sample, while family ownership is negatively associated with Tobin’s Q relative to strategic ownership, particularly among conventional energy firms. Ownership concentration is positively associated with ROA, with diminishing marginal effects (negative squared term), supporting a non-linear monitoring hypothesis. All findings are interpreted as conditional associations rather than causal effects due to the lack of a valid causal identification strategy within the sample constraints. The study contributes sector-specific evidence from Europe’s energy transition and offers practical insights for managers, investors, and other stakeholders on financing and governance.
Dette speciale undersøger, hvordan kapitalstruktur (gearing) og ejerskabsstruktur (ejertype og koncentration) hænger sammen med præstationen i børsnoterede europæiske energiselskaber. Analysen bygger på paneldata for 104 virksomheder i 23 europæiske lande i perioden 2014–2024 (1.139 virksomheds-år) på tværs af konventionel, blandet og vedvarende energi. Teoretisk tager studiet udgangspunkt i trade-off-teorien og agentteori, og der testes fire hypoteser om sammenhænge mellem gearing, indtjeningsvolatilitet, ejertype, ejerskabskoncentration og præstation målt ved afkast af aktiver (ROA) og Tobin’s Q. Metodisk anvendes to-vejs random effects panelregressioner med firmaklyngede standardfejl, og Driscoll-Kraay standardfejl rapporteres som robusthedstjek for at håndtere påvist heteroskedasticitet, autokorrelation og tværsnitsafhængighed. Resultaterne viser en ikke-lineær, omvendt U-formet sammenhæng mellem gearing og ROA i overensstemmelse med trade-off-teorien. Indtjeningsvolatilitet modererer ikke signifikant sammenhængen mellem gearing og præstation. Ejertype har ingen signifikant effekt på ROA i hele stikprøven, mens familieejerskab er negativt forbundet med Tobin’s Q sammenlignet med strategiske ejere, særligt i konventionelle energiselskaber. Højere ejerskabskoncentration er positivt forbundet med ROA, men med aftagende marginale effekter (negativt kvadratled), hvilket understøtter en ikke-lineær overvågningshypotese. Alle fund fortolkes som betingede associationer frem for kausale effekter, da en gyldig kausal identifikation ikke kunne implementeres inden for datagrænserne. Studiet bidrager med evidens fra den europæiske energisektor under energiovergangen og giver praktiske indsigter til ledere, investorer og andre interessenter om finansiering og governance.
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