Corporate Financing Decisions and Performance in Times of Crisis: Threat or Challenge?

The objective of this study is to provide empirical evidence regarding the impact of financial crisis on companies' financing preference and economic performance. In order to highlight this objective the data was organized in two different panels consisting of performance determinants in 79 different-sized companies (large and SMEs), listed on the Bucharest Stock Exchange over the period 2003-2014. Both panels were also divided in two sub-periods, before and after 2007, when the crisis was triggered in Romania. The main results obtained in the comparative regression analysis indicate that large companies register higher returns when they operate with limited borrowings, while small companies tend to perform better when they have higher debt ratios in the capital structure. The financial crisis affected the corporate performance and companies had to change their financing activity in order to minimize financial risks, avoiding borrowed funds.