Abstract: In this paper, we analyze the impact of the capital structure on the performance of non-listed companies. The study is based on data from 50 non-listed companies in Kosovo for the period 2015–2020. The financial statements of companies were used to generate data for this research. Regression methods ‘pooled OLS’, ‘fixed effects (FE)’, and ‘random effects (RE)’ were used in estimating the model, and the Hausman test was performed to test the fixed effects against the random effects model. Through dependent, independent, and control variables, the performance of companies is studied. The Kosovar non-listed companies use two accounting-based measures of financial performance: return on assets (ROA) and return on equity (ROE). The results of empirical tests indicate that a capital structure composed of short-term debt, long-term debt, and total debt is negatively influencing the performance of the companies measured by ROA. On the other hand, capital structure affects the company's performance positively, except for long-term debt, which has no significant impact on the company’s performance as measured by ROE. Based on the results, we can conclude that the choice of capital structure, in general, has a weak impact on the financial performance of non-listed companies in Kosovo, especially long-term debt, which has no significant impact on return on equity.

Keywords: capital structure, company performance, return on Assets, return on equity

JEL codes: L11, L32, L25

DOI: ...