Financing choices of firms in EU accession countries

The paper presents evidence on dynamics in actual and target capital structures of firms in five EU accession countries of Central and Eastern Europe and the former Soviet Union (Bulgaria, the Czech Republic, Poland, Romania and Estonia). We investigate and compare the determinants of firms' target capital structure and the speed of leverage adjustments. The average levels of debt-equity ratios of companies in advanced transition economies are found to be rather close to those observed for companies in several EU countries. The firms in the transition countries also tend to adjust their capital structure at the similar pace as their western counterparts. The determinants of target capital structure of firms in transition countries appear to be similar to what has been observed in EU countries.