Capital structure and firm performance: Agency theory application to Mediterranean aquaculture firms

The study uses firm level panel data to determine performance-leverage relationships among Mediterranean aquaculture production firms in Croatia, Italy, Spain, France and Greece. A stochastic frontier function is used define performance through efficiency estimates. multilevel internal instrument variable approach employed identify the causal between leverage. Our results show that technical has been increasing across all over period 2008–2016. agency-cost hypothesis holds such leverage an inverted U-shaped relationship with performance. This implies increases efficiency, but begins decrease at sufficiently higher levels of reverse confirms franchise-value hypothesis, which states high will try protect value their income by holding more equity capital. Implications for are drawn region.