Market Performance and Capital Structure of the Companies Listed on the Warsaw Stock Exchange in Poland

The purpose of this study is to examine the effect capital structure has on the market performance of the companies listed on the Warsaw Stock Exchange in Poland in 2000–2015 as well as to present the empirical evidence of its significance using a panel data approach. The study was based on data obtained from the annual financial statements contained in the Notoria database and published on the Warsaw Stock Exchange. We used Tobin’s Q ratio and the market value of equity to book value of equity (MBVR) as the measure of corporate performance. When Tobin’s Q was modelled, the level of leverage proved to be significant. It means that the company’s capital structure affects its performance. The sign between both variables, LEVERAGE and Tobin’s Q, is positive which is in line with trade-off theory. The dynamic panel data modelling approach allowed the conclusion that, irrespective of the measure selected (Tobin’s Q or the MBVR), the value of the measure depends positively on its value in the previous year. It means that a high performance noted in a previous year constitutes the basis for good results in the following year.