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Citation: Stoiljkovi´c, A.; Tomi´c, S.;
Lekovi´c, B.; Uzelac, O.; ´
Curˇci´c, N.V.
The Impact of Capital Structure on the
Performance of Serbian
Manufacturing Companies:
Application of Agency Cost Theory.
Sustainability 2024,16, 869. https://
doi.org/10.3390/su16020869
Academic Editor: Vasilii Erokhin
Received: 4 November 2023
Revised: 25 December 2023
Accepted: 15 January 2024
Published: 19 January 2024
Copyright: © 2024 by the authors.
Licensee MDPI, Basel, Switzerland.
This article is an open access article
distributed under the terms and
conditions of the Creative Commons
Attribution (CC BY) license (https://
creativecommons.org/licenses/by/
4.0/).
sustainability
Article
The Impact of Capital Structure on the Performance of Serbian
Manufacturing Companies: Application of Agency Cost Theory
Aleksandra Stoiljkovi´c 1, Slavica Tomi´c 1,* , Bojan Lekovi´c 1, Ozren Uzelac 1and Nikola V. ´
Curˇci´c 2
1
Department of Management, Faculty of Economics in Subotica, University of Novi Sad, 24000 Subotica, Serbia;
aleksandra.stoiljkovic@ef.uns.ac.rs (A.S.); bojan.lekovic@ef.uns.ac.rs (B.L.); ozren.uzelac@ef.uns.ac.rs (O.U.)
2Tamiš Research and Development Institute, 26000 Panˇcevo, Serbia; curcic@institut-tamis.rs
*Correspondence: slavica.tomic@ef.uns.ac.rs; Tel.: +381-24-628-039
Abstract: This paper examines the impact of debt in the capital structure on agency costs and therefore
on the performance of a company. The efficiency of companies was estimated using two parametric
techniques: Ordinary Least Squares (OLS) methods and a Stochastic Frontier Analysis (SFA). The
estimated efficiency represents a measure of (inverse) agency costs. Agency costs cause a lower level
of efficiency compared to companies that have minimized these costs, and companies that reach the
efficiency frontier, in the observed context of this research, are viewed as those that have minimized
agency costs. A panel regression model was applied in order to determine the direction and intensity
of the influence of leverage and control variables on the initially estimated efficiency of the company.
The results of this research on Serbian manufacturing companies show the expected positive effect
of capital structure (leverage) on the efficiency of the company, which is in accordance with the
predictions of the agency cost theory. The contribution of this research is reflected in the application
of efficiency as a performance indicator in the observed context of examining the theory of agency
costs, bearing in mind that the measure of efficiency is closer to the theoretical view of these costs.
Keywords: efficiency; agency cost; performance; capital structure; leverage; conflict of interest
1. Introduction
The economic activity of companies presupposes the availability of appropriate re-
sources. Resources include all assets, capabilities, organizational processes, company
attributes, information, knowledge, etc., which are controlled by a company and which
enable it to design and implement strategies that improve its efficiency and effectiveness [
1
].
In order for a company to operate successfully in market conditions, it is necessary to
dispose of appropriate resources and to successfully use resources in achieving tasks and
goals [
2
] (p. 31). Krtsti´c and Sekuli´c [
3
] emphasize the importance of managing the use of
resources in order to achieve the economic and non-economic goals of a company. Organi-
zational goals represent an organization’s reason for existence and the outcomes it seeks to
achieve [
4
] (p. 74). Komazec, Tomi´c and Jakovˇcevi´c [
2
] (p. 32) define goals as the desired
state toward which the entire activity of a company is directed.
One of the assumptions on which the traditional theory is based is that the goal
of a company is to maximize profits, which implies that the “company” somehow has
a mind of its own capable of arriving at independent, rational decisions. In reality, of
course, companies do not make decisions; it is entrepreneurs, managers and employees
(i.e., individuals) who make business decisions, while a “company” is nothing more than
an abstract concept that includes owners, managers and employees [
5
] (p. 194). Jensen
and Meckling [
6
] (p. 311) view each company as “a legal fiction which serves as a focus
for a complex process in which the conflicting objectives of individuals are brought into
equilibrium within a framework of contractual relations.” The aforementioned conflict is
particularly significant for re-examining the traditional goal of a company’s operations.
Sustainability 2024,16, 869. https://doi.org/10.3390/su16020869 https://www.mdpi.com/journal/sustainability
Sustainability 2024,16, 869 2 of 25
In the case in which a wholly owned company is managed by its owner, the traditional
assumption of profit maximization is acceptable. However, since each person has their own
interests and consciously enters organizational systems in order to realize their personal
interests more fully and comprehensively through them, due to the diversity of people
and their interests, during their realization, there is a conflict of the interests of individuals
and organizational systems. Also, any conscious association of people into certain types,
forms and modalities of organizational systems limits the freedom of behavior, thereby
limiting the possibilities for the desired realization of personal interests. Likewise, any
aspiration and effort to satisfy personal interests more fully at the expense of other people
in the structure of an organizational system disrupts organization and thus the efficiency
and effectiveness of the functioning of the organizational system and the achievement of
its goals [7] (p. 220).
Over time, the relationship between ownership and control in companies has changed
substantially, from the earliest forms when companies were owned and managed by the
same people to the development of large corporations in which a separation of ownership
from control emerged. Ownership is in the hands of shareholders, while control is largely
in the hands of the senior managers and executive directors of the company. This situation
is described as managerial capitalism and has led to “managerial theories” to explain the
behavior of companies [
5
] (p. 194). Managerial theories view each company as a “coalition”
of managers, workers and owners, and each group has its own objectives [8] (p. 25).
Different groups within a company (owners, managers, creditors, and the community)
have very different interests and incentives, which can result in a conflict of interest
between them. The costs caused by these conflicts are called agency costs [
9
] (pp. 15–16). A
governance system in which ownership and management are separated can create potential
costs due to conflicts of interest [
10
] (p. 574). Costs due to conflicts of interest arise when
managers or other interest groups undertake activities that conflict with the interests of
the company’s owners. In joint-stock companies in the private sector, shareholders (the
owners or “principals” of the firm) appoint directors as their “agents” to manage the firm
efficiently; that is, a principal–agent relationship arises which raises the whole question
of the objectives of companies and management and the subject of corporate governance.
Profit maximization and therefore the drive for a more efficient use of resources, though
presumably desired by shareholders, may not always be the primary goal of managers [
5
]
(p. 90). The assumption of profit maximization can be replaced by alternative goals which
management aims to achieve, such as sales revenue maximization, managerial utility
maximization and corporate growth maximization [5] (p. 200).
The agency conflict between a manager (agent) and outside shareholders (principal)
arises due to the manager’s tendency to appropriate perquisites out of the firm’s resources
for his own consumption but also due to the reduction of his efforts in finding and realizing
profitable ventures, which can lead to the company’s value being significantly lower
compared to the case in which the company is fully owned by the manager, so he is
encouraged to be more personally involved in the aforementioned activities [
6
]. Although
in theory managers, as agents of shareholders (principals), should manage the assets in
the interests of the principals, in practice, this cannot be guaranteed. In practice, agents
may lack incentives or motivation to pursue their principals’ goals, and the principal–agent
relationship may involve costs in terms of lower efficiency. At the root of the problem
lies the fact that the principal faces costs, not least in terms of time and effort involved, in
monitoring the work of their agents [5] (p. 197).
Jensen and Meckling [
6
], in the theory they developed, explain why the manager
of a company whose capital structure contains both debt and outside equity undertakes
activities so that the total value of the company is less than it would be if the manager were
its sole owner and why their failure to maximize the value of the company is perfectly
consistent with efficiency. If both parties seek to maximize utility, there is good reason
to believe that the manager (agent) will not always act in the best interest of the owner
(principal). On the other hand, the principal can limit divergence from their own interests
Sustainability 2024,16, 869 3 of 25
with the appropriate incentives for the agent and by incurring monitoring costs designed
to limit the agent’s aberrant activities. In addition, in some situations, the principal will
pay the agent to expend resources (bonding costs) to guarantee that the agent will not
take certain actions which would harm the principal or to ensure that the principal will be
compensated if the agent does take such actions. In most agency relationships, the principal
and the agent will incur positive monitoring and bonding costs (non-pecuniary as well as
pecuniary) and, in addition, there will be some divergence between the agent’s decisions
and those decisions which would maximize the welfare of the principal. The monetary
reduction in welfare experienced by the principal due to this divergence is also a cost of the
agency relationship and is called a “residual loss” [6] (p. 308).
Since agency costs are as real as any other costs, the objective is to minimize them. The
objective is not the minimization of the residual loss but the sum of all agency costs, which
include monitoring and bonding costs; therefore, the levels of these activities should satisfy
the conditions of efficiency. The above will not result in the company being run in a manner
so as to maximize its value since agency costs inevitably arise as a result of an agency
relationship and the value of a company in which there is a separation of ownership and
control will, as a rule, always be lower than that of a company which is wholly owned by
its manager. The reduced value of the company caused by the manager’s consumption of
perquisites is “non-optimal” or inefficient only in comparison to a world in which we could
achieve compliance of the agent with the principal’s wishes at zero cost or in comparison
to a hypothetical world in which the agency costs were lower [
6
]. Therefore, comparing
the real world with an ideal but nonexistent world in which agency costs do not exist and
concluding that the real world is (relatively) inefficient would be a typical example of what
Demsetz [
11
] calls the Nirvana fallacy, since agency costs (monitoring and bonding costs
and “residual loss”) are an unavoidable result of an agency relationship [6].
An increase in the company’s leverage can reduce the agency costs of outside equity,
but the opposite effect can occur with the agency cost of debt, which arises as a result of a
conflict of interest between shareholders and debt holders [
12
] who have different require-
ments for the cash flows generated by the company. Agency costs arising from conflicts
between debt holders and equity holders or from different principal–agent objectives will
give rise to resource misallocation and the sacrifice of potential output [
13
], which will
cause a lower level of efficiency compared to companies that have minimized these costs.
The nature of the relationship between the level of debt in a firm’s capital structure
and economic performance represents one of the most important issues in corporate
governance [
14
]. This paper examines the role of debt as an internal mechanism of corporate
governance in mitigating conflicts between the owners and manager of a company and
its effect on company performance. The aim of this research is to analyze the impact of
capital structure on efficiency as a measure of company performance. The contribution of
this research is reflected in the application of efficiency as a performance indicator in the
observed context of examining the theory of agency costs, bearing in mind that the measure
of efficiency is closely related to the theoretical definition of these costs. The importance
of the application of the mentioned concept is reflected in the fact that in addition to
evaluating the efficiency of a company’s use of resources, it also represents a relative
measure of performance in relation to other companies. Therefore, unlike simple financial
indicators, the analysis of company efficiency identifies potential deviations between the
actual and optimal (maximum potential) performance of companies. Bearing in mind that
agency costs lead to resource misallocation and the sacrifice of potential output [
13
], the
estimated efficiency of a company is closer to the theoretical view of these costs. Agency
costs cause a lower level of efficiency compared to companies that have minimized these
costs, and companies that reach the efficiency frontier, in the observed context of this
research, are viewed as those that have minimized agency costs. Therefore, the estimated
efficiency represents a measure of (inverse) agency costs.
The remainder of the paper is organized as follows. Section 2reviews corporate
governance mechanisms to mitigate the agency problem with special emphasis on debt as
Sustainability 2024,16, 869 4 of 25
one of the internal mechanisms of corporate governance and describes research hypothesis
development based on a literature review. Section 3describes the research methodology
of this study, such as the selection of the research sample, data collection, variable selec-
tion, model specification and data processing methods. Section 4presents the empirical
findings and discusses the theoretical and practical implications of this research. Finally,
Section 5concludes this article, states the limitations of this research and provides scope
for further research.
2. Literature Review and Hypothesis Development
2.1. Conflicts of Interest and Mechanisms to Mitigate the Agency Problem
The relationship of agency represents one of the oldest and most common codified
modes of social interaction [
15
] (p. 134). Still, in his capital work The Wealth of Nations
in 1776, Adam Smith pointed out that “the directors of such joint-stock, however, being
the managers rather of other people’s money than of their own, it cannot well be expected,
that they should watch over it with the same anxious vigilance with which the partners
in a private copartnery frequently watch over their own” [
16
] (p. 700). Berle and Means
state that the separation of ownership from control produces a condition in which the
interests of owners and of the ultimate manager may, and often do, diverge [
17
] (p. 7).
Apart from the fact that it dates back to the 18th century, it is also important to point
out the generality of the agency problem. Essentially all contractual arrangements, such
as those between an employer and an employee or between the state and the governed,
contain important elements of agency [
15
] (p. 134). The relationship between stockholders
and the manager of a corporation fits the definition of a pure agency relationship [
6
]
(
p. 309
). Corporate managers are the agents of shareholders, a relationship fraught with
conflicting interests [
18
] (p. 323). Companies (corporations) are legal entities, and their
representation in legal transactions takes place through the phenomenon of representation
agency [
19
] (p. 7). The agency problem is defined as the problem of how person A can
motivate person B to work for the benefit of person A and not to pursue person B’s own
interest. This type of problem basically does not occur in owner-managed companies,
where there is no separation of professional management from the owner, but only exists
in the legal environment of ownership (property) separated from management [
19
] (p. 6).
Therefore, from the company owner’s point of view, agency costs can be understood as
the opportunity costs of hiring managers [
20
] (p. 421). On the other hand, professional
managers may be more qualified to run a business because of their technical expertise,
experience and personality traits, which is certainly one of the reasons for hiring them [
21
].
Fulfilling the goals and interests of different interest groups in a company can often
be mutually opposed actions [
22
]. There are many misunderstandings and conflicting
interests between shareholders and management due to the division of roles within an
organization [
23
] (pp. 1–2). Although managers, as agents of owners, should work for the
benefit of owners, incentives for managers to act for their own benefit are always present.
The separation of ownership and control in a professionally managed firm may result in
managers exerting insufficient work effort, indulging in perquisites, choosing inputs or
outputs that suit their own preferences or otherwise failing to maximize firm value [
12
]
(p. 1066). The problem of ensuring that professional managers work in the interests of
the owners and not in their own interests is particularly pronounced in companies with
disparate ownership [
24
]. In a corporation with many small owners, it may not pay any of
them to monitor the performance of management [25] (p. 461).
Principals will develop mechanisms to monitor their agents in order to mitigate
opportunistic behavior and better align the parties’ interests [
26
] (p. 5). Principals can
discourage this behavior of managers using various mechanisms of monitoring and control,
including supervision by independent directors, the threat of takeover and the threat of
bankruptcy [
27
,
28
], but each of these mechanisms also causes certain costs, so perfect
monitoring is out of the question [27].
Sustainability 2024,16, 869 5 of 25
Although the agency relationship between the owners and managers of a company is
fraught with conflicts of interest and incentives for managers to act in their own interests
rather than in the interests of owners, there are forces and constraints that align the interests
of owners and managers [
10
] (p. 574) and a range of corporate governance tools to reduce
agency costs [29] (p. 2).
Fama [
30
] points out the importance that the managerial labor market, both external
and internal, can have in solving potential incentive problems associated with the sepa-
ration of ownership and control in companies; that is, he explains how the pressure of
the managerial labor market can aid in disciplining managers. The success or failure of
a company represents a significant signal to the managerial labor market regarding the
talent of the manager and their ability to ensure the survival of the company on the market
and about the value of the human capital of the company manager. The performance
of the company may not be directly reflected in the current salary of the manager, but it
will have an impact on the future salary of the manager, given that the managerial labor
market will use the performance of the company in evaluating the human capital of the
company manager, that is, in determining the possible external earnings of the manager.
Therefore, the value of the manager’s human capital on the managerial labor market will
depend on the success or failure of the company. In addition to the discipline created by
the competitive external managerial labor market, an internal managerial labor market can
be an effective mechanism for monitoring managers. Regarding a company’s top managers
who comprise the board of directors, the existence of competition among the top managers
themselves is perhaps the best mechanism for controlling the work of this body, while
lower levels of management are usually supervised by higher levels of management. Also,
Fama [
30
] states that an efficient capital market can indirectly assist the managerial labor
market in evaluating a company’s management. That is, the value of the company’s shares
can represent a significant signal to the managerial labor market that will indirectly affect
the manager’s valuation.
Grossman and Hart [
28
] (p. 107) state that in corporations that are owned by many
small shareholders (dispersive ownership), the “incentive problem” is especially present,
that is, the managers have their own goals, such as the enjoyment of perquisites or the
maximization of their own income, which are in conflict with shareholders’ goals related
to profit or market value maximization. Jensen and Meckling [
6
] state that increases in
management ownership contribute to a reduction in the divergence of interests, that is, the
cost of deviation from value maximization declines as management ownership increases.
The authors explain the above using the fact that with increases in management ownership,
the managers also bear a greater part of the costs of their on-the-job consumption, and they
are less likely to waste corporate wealth. Therefore, increasing management ownership
contributes to improving corporate performance.
However, Morck, Shleifer and Vishny [
31
] state that theoretical arguments alone cannot
unambiguously predict the relationship between management ownership and corporate
performance. Thus, under the “convergence of interests” hypothesis, the authors find
that as management ownership increases, agency costs decline and corporate performance
improves, as previously suggested by Jensen and Meckling [
6
]. However, with the “en-
trenchment” hypothesis, Morck, Shleifer and Vishny [
31
] prove that with a sufficiently high
management stake, there is a decline in company performance because in this, situation
managers pursue their own goals instead of the goal of maximizing the company’s value.
The reason for this is that when a manager owns only a small stake, the discipline created
by the market may still force them to maximize the value of the company, which was
previously explained through the pressure that the managerial labor market can have in
disciplining managers [
30
]. Therefore, when management’s ownership increases beyond
the point at which market-imposed discipline is still effective, the entrenchment effect
causes the company’s performance to decline. Demsetz [
32
] also highlights the entrench-
ment effect of managers and states that significant management ownership can potentially
cause managers to focus more on their own interests rather than the interests of outside
Sustainability 2024,16, 869 6 of 25
shareholders, thus contributing to a reduction in company value. In addition to managerial
ownership, Shleifer and Vishny [
33
] show how the concentration of ownership, in various
forms including large shareholders, takeovers and large creditors, contributes to mitigating
the agency problem.
Grossman and Hart [
28
] (p. 107) state that salary incentive schemes, such as profit-
sharing arrangements or stock options, can contribute to aligning the interests of managers
with the interests of shareholders. Myers [
27
] (p. 96) also states that the interests of
managers and investors can be aligned through the design of a compensation package, but
he points out that this mechanism is not perfect and has its shortcomings.
Grossman and Hart [
28
] also state the incentive effect that the threat of taking over a
company creates for managers to achieve higher profits, while they especially emphasize
the importance of the threat of the possible bankruptcy of the company in improving the
quality of management, i.e., in turning managers toward the interests of the owners and
maximizing profits. If managers do not seek high profits, the probability that the company
will go bankrupt increases, and in that case, the managers will lose all the benefits they
receive from the company in the event of bankruptcy. Therefore, managers will seek to
maximize the company’s profits rather than risk losing their perquisites. Grossman and
Hart [
28
] (p. 108) point out that the efficacy of bankruptcy as a source of discipline for
management will depend on the company’s financial structure—in particular, its debt-
equity ratio. The reason for the above is that companies that do not have debt are protected
from bankruptcy, and therefore managers have less reason to maximize profit. The man-
ager’s potential loss of his benefits under the threat of bankruptcy is one of many possible
incentive schemes that can induce good managerial performance [28] (p. 131).
Jensen [
18
] also states the importance and benefits of using debt in motivating man-
agers and companies to be more efficient. The conflict of interests between shareholders
and managers regarding payout policy is particularly serious when the company generates
substantial amounts of free cash flow. Free cash flow is cash flow in excess of what is
required to fund all projects that have positive net present values when discounted at
the relevant cost of capital. The problem is how to motivate managers to disgorge the
cash rather than investing it at below the cost of capital or wasting it on organization
inefficiencies [
18
] (p. 323). Jensen [
18
] states that debt service obligations reduce the free
cash flow that managers may use for discretionary spending, so debt is very useful in
reducing the agency costs of free cash flow. The threat caused by the failure to make debt
service payments serves as an effective motivating force to make such organizations more
efficient [
18
] (p. 324). Debt also restricts the agent’s capacity to diminish value via a lack of
effort or perquisite spending [34] (p. 2).
However, increased leverage also comes with costs. As leverage increases, the agency
costs of debt, which are mainly related to bankruptcy costs, rise. Therefore, the optimal
debt/equity ratio is the point at which the value of the company is maximized, the point at
which the marginal costs of debt just offset the marginal benefits [
18
] (p. 324). However,
Jensen [
18
] warns that issuing debt will not always have a positive control effect and points
out that the stated effect will not be as important for rapidly growing organizations with
large and highly profitable investment projects but no free cash flow and that the control
function of debt is more important in organizations that generate large cash flows but have
low growth prospects [
18
] (p. 324). Myers [
27
] (p. 98) explains the above using the fact
that growth companies have more to lose, unlike a company lacking valuable investment
opportunities for which the debt-overhang problem is no problem. Therefore, these agency
costs, caused by the conflict of interest between debt and equity holders, help explain
why growth companies tend to rely on equity. Although debt can mitigate the problem of
“overinvestment”, on the other hand, it can cause what Myers [
35
] calls “underinvestment”
or “debt overhang” problem and in that case the debt will have a negative effect on the
value of the company.
Financing decisions are now still controversial, particularly in relationship with firm
efficiency. Some theoretical and empirical studies have shown that there is a positive
Sustainability 2024,16, 869 7 of 25
impact of debt financing choices on firm performance, whereas others have proved that
the impact is negative [
36
] (p. 24). Vijayakumaran [
37
], in addition to other internal
governance mechanisms, investigates the impact of debt financing on agency costs using a
large panel of Chinese listed firms. Research results suggest that debt financing functions
as effective corporate governance mechanisms for Chinese listed firms to mitigate agency
conflicts and resulting agency costs. A study by Rashid Khan et al. [
38
] supports the
literature, finding that agency cost and firm performance are negatively related to the
Chinese listed firms. Kontuš [39] finds that equity to capital and long-term debt to capital
variables positively and significantly influence the agency costs of listed companies in the
Republic of Croatia. The study also indicates that the long-term debt to capital variable has
a negative and significant impact on the agency costs of listed companies in Slovenia and
the Czech Republic. Brendea et al. [
40
] examine the relationship between capital structure
and company performance in a sample of non-financial companies from eight Central and
Eastern European countries in the period of 2008–2017. The results indicate a negative
relationship between debt and company performance and therefore do not support the
agency cost hypothesis. Harvey et al. [
41
] find that debt mitigates the reduction in firm
value that accompanies a separation between a management group’s control rights and
its proportional cash flow ownership. The results indicate that the incremental benefit of
debt is concentrated in firms with high expected managerial agency costs that are also the
most likely to have overinvestment problems resulting from high levels of assets in place
or limited future growth opportunities.
Singh and Davidson [
42
] find in large firms that leverage is negatively related to one
of the measures of agency cost. Ankamah-Yeboah et al. [
43
] confirm that the agency cost
hypothesis holds in the Mediterranean aquaculture sector such that leverage has an in-
verted U-shaped relationship with performance. This implies that efficiency increases with
leverage, but efficiency begins to decrease at sufficiently high levels of leverage. Fernandes,
Vaz and Monte [
44
] determined a positive and statistically significant effect of short-term
leverage on the efficiency of companies in Portugal. Margaritis and Psillaki [
13
] found a
positive and significant effect of leverage on the efficiency of companies in France. The
cited authors show that debt is more significant for companies operating in industries with
fewer growth opportunities since the effect of debt on efficiency is greater for companies
in traditional industries. Margaritis and Psillaki [
45
] confirm the positive and significant
effect of leverage on efficiency in New Zealand companies as well. The results of Margaritis
and Psillaki [
45
] show a positive and significant effect of leverage on efficiency even in the
case of quadratic leverage, which shows that the determined effect remains positive in the
entire relevant range of leverage values. Berger and Di Patti [
12
] find in the U.S. banking
industry a positive and significant effect of leverage on estimated efficiency. The established
positive effect remained present even at a very high level of leverage. Le and Phan [
46
]
found a non-linear relationship between short-term leverage and company performance in
Vietnam, i.e., that at a high level of leverage, the relationship between leverage and com-
pany performance changes from positive to negative. The results of Nguyen and Tran [
36
]
illustrate that there is a non-linear relationship between leverage and firm performance.
These findings are consistent with the agency cost hypothesis.
2.2. Hypothesis Development
Viewing the company as a “black box” within which inputs are transformed into
predetermined outputs assumes that each company minimizes its costs and excludes the
possibility of misusing resources or making decisions that are not optimal; therefore, the
actual output is always equal to the potential output [
47
,
48
]. However, Leibenstein [
49
]
states that given inputs cannot be transformed into predetermined outputs. As reasons for
the discrepancy between the maximum possible output and realized output, which causes
what he calls X-inefficiency, he cites different interests between principals and agents,
inadequate motivation, and incomplete contracts that allow employees a certain degree of
discretion regarding the level of effort they invest in their work [
50
]. Therefore, in contrast
Sustainability 2024,16, 869 8 of 25
to the neoclassical approach to the firm, Leibenstein suggests an approach to the theory of
the firm that does not depend on the assumption of cost minimization by all firms but that
the level of unit cost depends to some measure on the degree of X-efficiency which, in turn,
depends on the degree of competitive pressure, as well as other motivational factors.
Stigler [
51
] (p. 213) states that there are important and pervasive problems in all con-
tracts between people in seeking the fulfillment of reciprocal contractual promises. Alchian
and Demsetz [
52
] state that substantial resources are required to enforce contractual accom-
plishment. Also, since it is practically technologically infeasible to formulate a complete
contract that would specify what the manager does in every situation, since most future
contingencies are hard to describe and foresee, the manager has some discretion to allocate
the owner’s funds at their discretion [
33
], which may lead to managers using discretionary
spending to achieve their own goals rather than the owner’s interests [53] (p. 4).
Although in theory, corporate managers, as agents of owners, should, in all situations,
act in accordance with the interests of owners and not in accordance with their own
interests [
6
], in practice, agents may lack the incentive or motivation to follow the goals
of their principals, and the principal–agent relationship may entail costs in terms of lower
efficiency [
5
] since it is impossible to achieve a complete alignment of the interests of the
agent (manager) and the principal (owner) with zero costs.
Although spending resources on various monitoring activities cannot completely
eliminate the opportunistic behavior of managers, these activities can significantly limit
divergence from the interests of the principal [
6
]. Therefore, bearing in mind that agency
costs (monitoring and bonding costs and “residual loss”) are an inevitable result of an
agency relationship, the goal is to minimize them.
Jensen and Meckling [
6
] state that the choice of capital structure can contribute to
mitigating agency costs and that a higher leverage level reduces the agency costs of outside
equity and increases the value of the company, limiting or encouraging managers to act
more in the interests of shareholders. A higher level of leverage can be used as a disciplinary
mechanism to reduce the opportunistic behavior of managers through pressure imposed by
the obligation to service the debt [
6
], but also due to the threat of the possible bankruptcy
of the company [
28
], which increases with an increase in the debt/equity ratio, which
certainly causes personal losses for managers in the form of loss of earnings, reputation,
perquisites, etc. [54].
Jensen [
18
] also states that debt can be significant in motivating managers and com-
panies to be more efficient. Since the obligation to service the debt reduces the free cash
flow over which managers have the discretionary right to spend, the danger of not being
able to properly service the debt is very motivating for improving organizational efficiency.
Jensen [
18
] points out that debt is particularly useful for companies with significant free
cash flows in mature industries with limited growth opportunities.
Therefore, based on the aforementioned theoretical framework, the following research
hypothesis was formulated:
H1.There is a positive relationship between capital structure (leverage) and company efficiency.
However, although the existence of debt in the capital structure can motivate managers
to act in accordance with the interests of the owners, i.e., leverage acts as a disciplining
mechanism in mitigating the agency costs of outside equity, the opposite effect can occur
with the agency cost of debt, which arises as a consequence of a conflict of interests between
stockholders and debt holders who have different requirements for cash flows generated
by the company. Debt holders are only interested in debt payment specified in the contract,
while stockholders, in order to achieve a return over and above the amount required to
repay debt, are interested in pursuing riskier business activities [
55
]. An organization’s
capital structure is the foundation for any sound investment policy [
56
] (p. 1). A high level
of debt can affect a company’s investment decisions. Default risk can cause the problem of
“underinvestment” [
35
]. Also, if the risk of default is significant, the manager can have a
strong incentive to implement very risky activities (investments) that will “transfer” wealth
Sustainability 2024,16, 869 9 of 25
from creditors to the company’s stockholders. Also, the inclusion of various covenants in
the indenture provisions to limit managerial behavior occasionally limits management’s
ability to take optimal actions on certain issues that may reduce the profitability of the
company [6].
Based on the above, the following research hypothesis was formulated:
H
2
.There is a non-linear relationship between the capital structure and efficiency of companies—at
lower levels of leverage, a positive impact on efficiency is expected, while at high levels of leverage,
the relationship changes from positive to negative.
3. Research Methodology
3.1. Sample and Data Collection
The target population consisted of joint stock companies operating in the Republic
of Serbia. The choice of the mentioned legal form stems from the theoretical framework
of the research, bearing in mind that the relationship between stockholders and corporate
managers fits into the definition of a pure agency relationship [
6
] (p. 309). The total number
of companies in the form of a joint stock company in the Republic of Serbia in 2020, based
on the annual financial report bulletin of the Business Registers Agency [57], was 1113.
Since an efficiency analysis was used to evaluate the company’s performance, it is
necessary that the sample consists of companies that apply mostly similar production
technologies; accordingly, traditional, mature areas within the manufacturing industry in
the Republic of Serbia were selected: the production of food products, the production of
beverages, the production of tobacco products, the production of textiles, the production
of clothing, the production of leather and leather goods, and the production of chemicals
and chemical products. According to the regulation on the classification of activities [
58
] in
the Republic of Serbia, the manufacturing industry belongs to sector C. The economic and
financial data of the companies were obtained from the website of the Business Registers
Agency [
57
] and the company website, scoring.rs [
59
]. The period of the research was
2006–2020. Companies for which financial reports were not available for all years of the
analyzed period were excluded from the initially defined sample based on the criteria of
legal form, selected areas of the manufacturing industry and period of analysis to avoid
using average values for missing data and thereby creating artificial variability. Also, due
to inadequate input/output data, it was not possible to assess the efficiency of certain
companies, which is why those companies were excluded from the initial sample and, after
the exclusions, the total number of observations was 855. Although the agency costs of
separation of ownership and management are more pronounced in large, organizationally
complex companies, bearing in mind that the time period of the analysis is very long and
that during the observed period in the Republic of Serbia, the legal criteria for determining
the size of the company [
60
] changed, and also that in the case of individual companies,
the values of the defined size criteria and thus the category to which they belong changed,
the sample was not restricted in terms of company size, but the size of the companies was
used as one of the control variables in the models.
3.2. Variable Selection and Model Specification
Empirical research includes two related phases. In the first phase, this research aimed
to evaluate the technical efficiency of companies in the areas of the manufacturing industry.
The efficiency of the companies was estimated using two parametric techniques: Ordinary
Least Squares (OLS) methods and a Stochastic Frontier Analysis (SFA). According to Berger
and Di Patti [
12
], Margaritis and Psillaki [
45
], Margaritis and Psillaki [
13
] and Fernandes,
Vaz and Monte [
44
], the estimated efficiency of a company is a measure of its (inverse)
agency costs, and the companies that achieve efficiency frontiers were viewed as those that
minimize agency costs.
The second phase of this research involved the application of panel regression models
in order to determine the direction and intensity of the influence of leverage and con-
Sustainability 2024,16, 869 10 of 25
trol variables on the initially estimated efficiency of companies. The literature identified
numerous factors that are significant determinants of the efficiency of companies, such
as size, age, ownership concentration, tangibility of assets and profitability; therefore, in
addition to determining the direction and intensity of the influence of leverage, it is very
important to examine the impact of these control variables on the estimated efficiency of
companies. The inputs in the efficiency model are represented by the number of employees
and fixed tangible assets, whereas the output is represented by net result of the company;
capital structure is measured by the leverage level, which is calculated as the ratio of total
liabilities to total assets; company size is represented by a natural logarithm of the total
assets; company age is represented by the number of years of operation (observed year
minus year of the establishment of the company); ownership concentration is represented
by the share of the largest shareholder (the given data refer to the year 2020, since data
on ownership shares for previous years were not available to the authors.); risk is repre-
sented by the standard deviation of the ROA; the tangibility of assets is calculated as (fixed
assets–intangible assets)/total assets; and profitability is represented by return on total
assets (ROA).
Hypothesis H
1
was tested with a model in which efficiency is estimated using the
COLS method (1) and a model in which efficiency is assessed using the SFA method (2):
E f f COLSi t =β0+β1LEV it +Zβ+eit (1)
E f f SFAit =β0+β1LEVit +Zβ+eit (2)
where LEV represents the leverage ratio; Zrepresents a limited design matrix that includes
a set of control variables, company size, company age, ownership concentration, risk,
tangibility of assets and profitability; and
eit
represents the error term composed of the
firm-specific (
ηi
) and time-specific effects (
λi
) followed by the time-varying error term (
ϵi
).
In functional form, the dominant influence of leverage on efficiency is expected, but it is
necessary to consider the mentioned control variables. So,
E f f icien cy =f(Leverage,Z)(3)
In general, a positive effect of company size on efficiency is expected. Large companies
can be more efficient in production because they use more specialized inputs, coordinate
their resources better, enjoy the benefits of economies of scale, etc. [
61
]. Large companies
generally have lower costs than small companies due to economies of large scale. However,
it should be noted that the superiority of large-scale operations usually depends on the
full or nearly full use of capacity [
62
]. In addition to economies of scale, large companies
have other advantages that make them more efficient than small companies. A large
company has a better chance of recruiting good and experienced executives internally, thus
avoiding the additional costs of finding an adequate workforce externally. Also, size, and
the reputation and strength which go with it, are an assurance to investors, enabling large
companies to borrow more easily and inexpensively than small ones. Financial strength
enables a firm to take risks, e.g., in the research and pilot development of new products,
which is especially important in industries where research is expensive, innovations are
frequent and obsolescence is high. Also, large companies have more scope for diversifying
their products, markets and sources of supply without losing much of the economy of
large-scale production, and diversification is a useful way of reducing overall risk [
62
].
A negative effect of size can arise in situations in which there is a loss of control due to
ineffective hierarchical structures in the management of a company [
63
]. Smaller companies
could be more efficient because they are more flexible, have non-hierarchical structures
and do not suffer from the agency problem precisely because of their smaller size [
61
]. On
the other hand, in addition to the inability to take advantage of scale economies, small
companies face difficulties in obtaining credit for investment, a lack of resources in terms of
qualified human capital and the informality of contracts with clients and suppliers, which
are factors that can explain their lower efficiency compared to large companies [64].
Sustainability 2024,16, 869 11 of 25
The positive effect of company age on efficiency is explained as a learning effect [
61
].
Older companies will be the most experienced in terms of their production and commercial
processes [
65
] since they have had more time to learn and become more experienced
in their operations and thus become more efficient [
66
] (p. 51). The negative effect of
company age on efficiency is explained by the fact that older companies generally use
older and less productive technologies rather than advanced technologies [
61
]. The high
replacement cost of capital results in older firms using equipment which does not embody
more recent technological advances, while younger firms are able to adopt the most efficient
technologies available at the time of their conception [66] (p. 51).
The effect of concentration of ownership on company efficiency can be explained by
the fact that concentrated ownership is a significant mechanism of management discipline
and contributes to mitigating the agency problem. Large shareholders solve the agency
problem in such a way that on the one hand, they generally have an interest in maximizing
profits, while on the other hand, they also have significant control over the company’s
assets, which allows them to have their interests respected. Thus, as ownership increases,
due to incentives to reduce agency costs, performance improves. However, concentrated
ownership has its costs. A high concentration of ownership leads to an entrenchment effect.
Large owners who have almost full control over a company can use the company to generate
private benefits from this control which are not shared by minority shareholders [33].
The effect of risk on the company’s efficiency is expected to be negative. Business risk
disrupts forecasting and planning activities, making it difficult to create an organizational
strategy and plan future actions. It is usually defined as greater variability in organizational
returns and increased chances of business failure [
67
]. Riskier companies tend to be those
that are poorly organized [
13
]. Also, higher levels of business risk not only make it more
difficult for the principal to determine what actions the agent takes but also make it more
difficult for the principal to determine what actions the agent should take [
67
]. On the
other hand, if we look for the argument in the classic risk–return trade-off, it is expected
that companies with greater variability in operating income will have higher returns [
68
],
and riskier companies can be evaluated as more efficient. However, companies that are
poor at operations might also be poor at risk management, yielding a negative relationship
between efficiency and risk [12].
Tangible assets are easily monitored and provide good collateral and therefore tend to
mitigate agency conflict [
13
]. The existence of asymmetric information and agency costs
may lead creditors to require collateralized guarantees. If a company has significant invest-
ments in land, equipment and other tangible assets, it will usually face lower financing
costs compared to a company that is based mostly on intangible assets [44].
A positive effect of profitability on efficiency is expected. More profitable companies
are generally better managed and are therefore expected to be more efficient [13].
Although a positive effect of leverage on the efficiency of companies is assumed, there
is a possibility that at sufficiently high levels of leverage, this effect may be negative. The
quadratic specification allows the relationship between leverage and efficiency to change
from positive to negative at a substantial increase in leverage. Therefore, hypothesis H
2
was tested using non-linear models. Non-linear specification was tested by a model in
which the efficiency was estimated using the COLS method (4) and by a model in which
the efficiency was estimated using the SFA method (5).
E f f COLSi t =β0+β1Leverageit +β2Leverage2
it +Zβ+eit (4)
E f f SFAit =β0+β1Leverageit +β2Leverage2
it +Zβ+eit (5)
3.3. Data Processing Methods
Bearing in mind the stochastic nature of efficiency dynamics, companies’ efficiency was
estimated using two parametric techniques: (1) Ordinary Least Squares (OLS) methods and
a (2) Stochastic Frontier Analysis (SFA). The choice regarding the use of parametric methods
resulted from obvious methodological advantages, primarily regarding problems arising
Sustainability 2024,16, 869 12 of 25
from measurement error and the predominant influence of random events. Therefore,
this research was based on information collected about the inputs (Input1: the number
of employees; Input2: fixed tangible assets) and outputs (Output1: net result) of each
company
(xk,yk)
in order to estimate the beta parameters, specify the production function,
and evaluate the performance of each company. The estimation of the production function
was based on the principle of maximum likelihood, so the estimated beta parameters
ˆ
β
were chosen to make the current observations as reliable as possible. The assessment of
(in)efficiency is based on the assumed process of generating observations, so within the
OLS approach, any deviation is considered a stochastic factor. Also, the SFA approach
assumes that any deviation from the estimated production function is due to inefficiencies
and stochastic factors.
Starting from the technology set T, the production function can be represented as an opti-
mal combination of inputs to maximize output. More formally,
f(x)=max{y∨(x,y)∈T}
,
implying that the inputs and outputs belong to the technological set T. According to the
parametric approach, the production function has an a priori assumed functional form,
but its dynamics are functions of unknown beta
(β)
parameters. Thus, the assumed pro-
duction function includes a vector of inputs and a vector of unknown beta parameters:
f(x)=f(x,β)
. In accordance with practice in comparable research, the Cobb–Douglas
production function was used in this research in order to reliably describe the production
processes of the companies that make up the research sample.
The application of Ordinary Least Squares (OLS) methods is a standard initial stage
in evaluating the efficiency of companies. More precisely, the empirical analysis in this
case will be based on the estimation of the parameters of the production function specified
as follows:
yk=f(xk,β) + vk
,
k∈{1, K}
, assuming deviations that are symmetric about
zero. This implies that the random parameter defined in this way follows a normal
distribution:
vkN0, σ2
. It should be noted that the standard stochastic OLS approach
generates individual observations that are greater than the production possibilities defined
by the production function. Therefore, this research was based on the correction of the
Ordinary Least Squares (COLS) estimation in order for the empirical research to be in
accordance with the postulates of economic theory.
After the COLS assessment, this research focused on evaluating the efficiency of
the companies using a Stochastic Frontier Analysis (SFA). Basically, the SFA is a respec-
ified parametric technique which, in addition to the stochastic parameter
v
(error term),
also includes an (in)efficiency parameter
u
. In this research, the log-linear SFA model
yk=f(xk,β) + vk+uk
,
k∈{1, K}
was applied, assuming that the stochastic parameter
v (error term) follows a normal distribution, while the (in)efficiency parameter follows a
normal distribution within the positive scale of values (a half-normal distribution). The
standard assumption that the stochastic parameter and the (in)efficiency parameter are
mutually independent,
u=
0, implies that the company is 100% efficient, while
u>
0
implies a certain degree of inefficiency.
After evaluating the efficiency, the second phase of empirical research involved the
application of panel regression models, more precisely, grouped OLS models, fixed effects
models and random effects models. STATA and R programs were used for data processing.
4. Data Analysis, Results and Discussions
Table 1presents descriptive statistics. The efficiency of the companies was estimated
using two parametric techniques. The average efficiency of companies in the observed
period, estimated using the COLS method, is 0.38. The efficiency estimated using the
SFA method shows that the average efficiency of the analyzed companies is 0.72. The
average efficiency usually differs between the two studied methods [
69
–
71
]. COLS and SFA
are completely different methodologies that take completely different approaches when
estimating the efficiency frontier, and it is quite expected that the average scores are different.
The average total leverage of the analyzed companies is 0.56, varying widely from 0.03 to
4.63. The average value of total leverage is comparable to the leverage values obtained in
Sustainability 2024,16, 869 13 of 25
other studies conducted in developing countries, where it is significant to point out that
high values of total leverage are due to very high levels of short-term leverage, while on the
other hand, these companies have a very low level of long-term leverage [
53
,
72
]. Since the
sample consisted of companies that were in operation for all years of the observed period,
the above also influenced the average age of the analyzed companies to be relatively high.
What is particularly worrying based on the descriptive statistics presented is that extremely
low average profitability characterizes the analyzed companies.
Table 1. Descriptive statistics for the period 2006–2020.
Variable Mean Std. Dev. Min Max Observations
Efficiency
(COLS)
overall 0.380933 0.2014898 6.60 ×10−81.05659 N = 855
between 0.1374826 0.1554902 0.8949224 n = 57
within 0.148346 −0.2047232 1.225443 T = 15
Efficiency
(SFA)
overall 0.7212987 0.228507 7.00 ×10−80.999702 N = 855
between 0.1038875 0.1656397 0.9456949 n = 57
within 0.2039602 0.1365755 1.495958 T = 15
Leverage overall 0.5616149 0.5421162 0.030457 4.62922 N = 855
between 0.3960727 0.0617331 1.942447 n = 57
within 0.3736149 −0.6269617 3.703435 T = 15
Leverage square overall 0.6089575 1.831457 0.0009276 21.42968 N = 855
between 1.076277 0.003894 5.291108 n = 57
within 1.488238 −3.92068 16.74753 T = 15
Size
overall 6.041712 0.7391403 4.40081 7.76653 N = 855
between 0.729737 4.643073 7.407187 n = 57
within 0.1451375 5.401032 6.534056 T = 15
Age overall 17.17544 14.69693 3 59 N = 855
between 14.72864 3 59 n = 57
within 1.619553 10.17544 24.17544 T = 15
Ownership
Concentration
overall 0.6742105 0.2414312 0.2 1 N = 855
between 0.2434349 0.2 1 n = 57
within 1.63 ×10−16 0.6742105 0.6742105 T = 15
Risk
overall 0.0985965 0.0877798 0.01 0.49 N = 855
between 0.0885082 0.01 0.49 n = 57
within 3.59 ×10−17 0.985965 0.0985965 T = 15
Tangibility
overall 0.5001261 0.1895378 0.077254 0.996655 N = 855
between 0.1478652 0.2198017 0.7892477 n = 57
within 0.1200786 −0.0197057 0.96589 T = 15
Profitability
overall 0.0007999 0.1403611 −0.8442 1.6148 N = 855
between 0.0793234 −0.27396 0.1898933 n = 57
within 0.1162419 −0.7745268 1.702053 T = 15
Source: authors.
This section will present the results of testing hypothesis H
1
using
Equations (1) and (2)
,
and then hypothesis H
2
using Equations (4) and (5) in order to test the effect of leverage on
the efficiency of the companies. Estimates using two models will be presented. In the first
model, the efficiency of the company was assessed using the COLS method, while in the
second model, the efficiency of the company was assessed using the SFA method.
To test Hypothesis H
1
, which assumes that there is a positive relationship between
leverage and company efficiency, a linear specification of leverage was used, while since
hypothesis H
2
assumes that at a high level of leverage, the relationship between leverage
and company efficiency changes from positive to negative, the quadratic specification of
leverage was used to test H2.
A multiple regression analysis of panel data was conducted using common panel data
estimation techniques. A Pooled Ordinary Least Squares (OLS) regression model, a Fixed
Sustainability 2024,16, 869 14 of 25
Effects (FE) model and a Random Effects (RE) model were used. To select the appropriate
model between the Pooled OLS and RE models, the Breusch–Pagan LM test was used. The
Breusch–Pagan LM test tests the null hypothesis that there are no significant differences
between observation units (i.e., no panel effect), or formally:
Null Hypothesis. The variance between observation units is zero.
The results of the chi-square statistic show that the RE model is more credible than the
Pooled OLS model. Since p< 0.05 (p= 0.000), null hypothesis is rejected. This test proves
that there is a panel effect and that the Random Effects model is better (a model that is
credible) for estimation than the OLS model. Since it has panel effects, an FE model and an
RE model were estimated.
The evaluation results of the RE model are presented in Table 2, and the FE model is
presented in Table 3. The results of both models show a positive and statistically significant
relationship between leverage and efficiency.
Table 2. The effect of capital structure on COLS efficiency (RE model).
Variable Coef. Std. Err. z p> |t|
Leverage 0.0298 0.0127 2.34 0.020
Size 0.1543 0.0194 7.95 0.000
Age −0.0013 0.0008 −1.67 0.095
Ownership Concentration 0.0692 0.0491 1.41 0.159
Risk −0.0045 0.0126 −0.36 0.719
Tangibility 0.0587 0.0389 1.51 0.132
Profitability 0.0731 0.0247 2.96 0.003
_cons −0.4847 0.0947 −5.12 0.000
Observations 855 Wald chi2(5) 132.83 0.0000
R-sq: within between overall
0.0674 0.3536 0.2765
Source: authors.
Table 3. The effect of capital structure on COLS efficiency (FE model).
Variable Coef. Std. Err. t p> |t|
Leverage 0.0445 0.0135 3.31 0.001
Size 0.2101 0.0411 5.11 0.000
Age −0.0058 0.0031 −1.9 0.057
Ownership Concentration 0.0729 0.0503 1.45 0.147
Risk −0.0068 0.0030 −2.32 0.021
Tangibility 0.0542 0.0224 2.42 0.016
Profitability 0.0984 0.0259 3,8 0.000
_cons −0.5877 0.2306 −2.55 0.011
Observations 855 F (5.812) 10.62 0.0000
R-sq: within between overall
0.0733 0.3867 0.2075
Source: authors.
In order to choose which of these two models is better, i.e., consistent in assessment,
the Hausman test was applied. With it, we tested the null hypothesis that the differences in
coefficients between the FE model and the RE model are not systematic, that is, that there is
no significant difference between the models, i.e., both models are consistent.
Null Hypothesis. Differences in coefficients are not systematic.
Based on the Hausman test statistic value of 25.02 with a probability of 0.0003, at a
significance level of 5%, Null hypothesis was rejected.
Sustainability 2024,16, 869 15 of 25
The results confirm the positive relationship between the capital structure and the
efficiency of companies. There is a positive and significant marginal effect of leverage on
efficiency and the model predicts that a unit change in total leverage could affect the change
in efficiency by 0.0445.
As for other variables that can have an impact on efficiency, the evaluated model
shows that with a percentage change in size, an increase in efficiency by 0.0021 is expected.
A unit change in asset tangibility and profitability can be expected to have a positive
marginal effect on efficiency, while a unit change in risk assumes a decrease in efficiency by
0.0068. The age variable is not significant at the 5% significance level, but it is significant
at the 10% significance level and has a negative effect on the efficiency of companies. The
ownership concentration variable has no significant effect on efficiency.
In the following section, the results of the model in which efficiency was assessed
using the SFA method will be presented. Since the Breusch–Pagan LM test showed that
there are significant differences between the observed companies (test statistic value of
52.28, with a probability of 0.0000), the RE model is more credible for estimation than the
OLS model. Table 4shows the results of the RE model for SFA efficiency.
Table 4. The effect of capital structure on SFA efficiency (RE model).
Variable Coef. Std. Err. z p> |t|
Leverage 0.0136 0.0040 3.42 0.001
Size 0.8006 0.2044 3.92 0.000
Age −0.0013 0.0007 −1.74 0.082
Ownership Concentration 0.0761 0.0468 1.63 0.104
Risk −0.0204 0.0042 −4.85 0.000
Tangibility 0.0468 0.0080 5.84 0.000
Profitability 0.0241 0.0321 0.75 0.451
_cons 1.3298 0.0950 14.01 0.000
Observations 855 Wald chi2(5) 84.52 0.0000
R-sq: within between overall
0.0747 0.2839 0.1092
Source: authors.
By applying the Hausman test, based on the test statistic value of 35.08 (p= 0.0000) at
a significance level of 5%, it was proven that the FE model is consistent in the estimation,
and the interpretation of the results of this model follows.
The results of the FE model for SFA efficiency are presented in Table 5.
Table 5. The effect of capital structure on SFA efficiency (FE model).
Variable Coef. Std. Err. t p> |t|
Leverage 0.0106 0.0040 2.66 0.008
Size 0.2042 0.0421 4.85 0.000
Age −0.0164 0.0042 −3.95 0.000
Ownership Concentration 0.0354 0.0494 0.72 0.473
Risk −0.0158 0.0041 −3.91 0.000
Tangibility 0.0661 0.0101 6.53 0.000
Profitability 0.0649 0.0352 1.85 0.065
_cons 1.5243 0.3130 4.87 0.000
Observations 855 F (5.812) 14.01 0.0000
R-sq: within between overall
0.0945 0.1052 0.0422
Source: authors.
As in the previous model in which the dependent variable was the efficiency assessed
using the COLS method, in the model of efficiency assessment using the SFA method,
there is a positive and significant marginal effect of leverage on efficiency. If the leverage
increases by 1, it is expected that the efficiency increases by 0.0106.
Sustainability 2024,16, 869 16 of 25
Regarding other variables, there is a positive and statistically significant relationship
between company size, age, risk and efficiency. The ownership concentration variable, as
in the previous model, is not significant for this model specification, nor is the profitability
variable. The relationship between risk and efficiency is negative, and the model predicts
that a unit change in the risk measure would affect the reduction in efficiency by 0.0158.
Both models show a positive effect of capital structure on the efficiency of the company.
However, since the agency costs of debt can reverse this relationship at very high leverage
levels, hypothesis H2was tested using a non-linear specification of leverage.
In order to test hypothesis H
2
, which predicts the existence of a non-linear relationship
between the capital structure and the efficiency of the companies, a non-linear model
specification was used which allowed the relationship between the capital structure and the
efficiency of the companies to be non-monotonic, i.e., it was able to change from positive to
negative at a high leverage level.
A Breusch–Pagan LM test statistic value of 174.5 (p= 0.0000) proved that the RE
model is more credible for estimation than the OLS model. The results of the RE model are
presented in Table 6.
Table 6. Non-linear relationship between capital structure and COLS efficiency (RE model).
Variable Coef. Std. Err. z p> |t|
Leverage 0.0002 0.013479 0.01 0.991
Lev2−0.0026 0.000455 −5.68 0.000
Size 0.1519 0.0184 8.23 0.000
Age −0.0012 0.0007 −1.62 0.106
Ownership Concentration 0.0718 0.0459 1.56 0.118
Risk −0.0039 0.0118 −0.33 0.741
Tangibility 0.0471 0.0380 1.24 0.215
Profitability 0.2753 0.0434 6.34 0.000
_cons −0.4293 0.0899 −4.78 0.000
Observations 855 Wald chi2(5) 178.11 0.0000
R-sq: within between overall
0.0859 0.413 0.1236
Source: authors.
The Hausman test statistic value of 25.02 with a probability of 0.0008 and a significance
level of 5% proved that the FE model is consistent in the estimation. Table 7presents the
results of the non-linear relationship between capital structure and COLS efficiency using
the FE model.
Table 7. Non-linear relationship between capital structure and COLS efficiency (FE model).
Variable Coef. Std. Err. t p> |t|
Leverage 0.0165 0.01488 1.11 0.267
Lev2−0.0020 0.000486 −4.22 0.000
Size 0.1897 0.0410 4.63 0.000
Age −0.0050 0.0030 −1.64 0.102
Ownership Concentration 0.0741 0.0471 1.57 0.115
Risk −0.0690 0.0149 −4.62 0.000
Tangibility 0.0533 0.0221 2.41 0.016
Profitability 0.2509 0.0443 5.66 0.000
_cons −0.4522 0.2305 −1.96 0.050
Observations 855 F (8.812) 11.83 0.0000
R-sq: within between overall
0.0933 0.3393 0.1446
Source: authors.
The results in Table 7show the existence of a non-linear relationship between
leverage and efficiency. The coefficient of quadratic leverage is negatively and stati-
Sustainability 2024,16, 869 17 of 25
stically significantly related to efficiency, indicating that leverage at a high level is
negatively related to efficiency. A marginal effect of leverage on COLS efficiency,
b2
×
Lev
2
=
−
0.0020466
×
Lev
2
= 2
×
(
−
0.0020)
×
Lev, i.e., with a marginal change
in leverage, is expected to decrease efficiency by 2 ×(−0.0020) ×Lev.
Regarding other variables, company size, the tangibility of assets and profitability have
predicted positive and significant effects on efficiency, while the expected effect of risk on
efficiency is negative. The variables leverage, company age and ownership concentration
are not significant in this model specification.
The non-linear relationship between capital structure and efficiency was also tested in
the model in which the dependent variable was estimated using the SFA method. Applying
the Breusch–Pagan LM test based on the test statistic value of 20.33 (p= 0.0000) proved that
the RE is consistent in its estimation compared to the OLS model.
Table 8presents the results of the non-linear relationship between capital structure
and SFA efficiency using the RE model.
Table 8. Non-linear relationship between capital structure and SFA efficiency (RE model).
Variable Coef. Std. Err. z p> |t|
Leverage −0.0416 0.016605 −2.5 0.012
Lev20.0041 0.0005798 7.01 0.000
Size 0.7815 0.5539 1.41 0.159
Age −0.0011 0.0006 −1.69 0.091
Ownership Concentration 0.1046 0.0439 2.38 0.017
Risk −0.0059 0.0106 −0.55 0.580
Tangibility 0.0365 0.0065 5.63 0.000
Profitability 0.0439 0.0174 2,53 0.012
_cons 1.3871 0.0852 16.27 0.000
Observations 855 Wald chi2(5) 143.26 0.0000
R-sq: within between overall
0.0859 0.413 0.1236
Source: authors.
To select the appropriate model between the FE and RE, the Hausman test was applied.
A Hausman test statistic value of 40.36 with a probability of 0.0000 at a significance level
of 5% shows that the Fixed Effects model is consistent in its estimation. The results of the
model using the FE method are shown in Table 9.
Table 9. Non-linear relationship between capital structure and SFA efficiency (FE model).
Variable Coef. Std. Err. t p> |t|
Leverage 0.0216 0.020122 1.07 0.283
Lev2−0.0032 0.000657 −4.9 0.000
Size 0.7641 0.1847 4.14 0.000
Age −0.0151 0.0041 −3.67 0.000
Ownership Concentration 0.0773 0.0412 1.88 0.061
Risk −0.0061 0.0114 −0.54 0.590
Tangibility 0.0562 0.0086 6.57 0.000
Profitability 0.0310 0.0178 1.74 0.081
_cons 1.7371 0.3117 5.57 0.000
Observations 855 F(8.812) 15.78 0.0000
R-sq: within between overall
0.1207 0.1672 0.068
Source: authors.
The results of the FE model confirm that the relationship between capital structure and
efficiency is non-linear. A significant increase in leverage is expected to reduce efficiency.
There is a statistically significant positive relationship between the size of a company
and efficiency. Also, a statistically significant positive relationship exists between the
Sustainability 2024,16, 869 18 of 25
tangibility of assets and the efficiency of a company, and with a marginal change in the
aforementioned independent variables, the estimated value of efficiency is expected to
increase. The relationship between company age and efficiency is negative. The variables
ownership concentration, risk and profitability are not statistically significant.
Based on the presented results of empirical research on the impact of capital structure
on the efficiency of companies in the Republic of Serbia, it can be concluded that research
hypotheses H1and H2have been confirmed.
The existence of debt in the capital structure, on one hand, reduces the agency costs
of equity and thereby contributes to increasing the efficiency of companies, while on the
other hand, with very high leverage, the agency costs of debt can exceed the agency costs
of equity, which increases the total agency costs and consequently reduces the efficiency
of companies. Hypothesis H
1
assumes that higher leverage motivates managers to act
more in line with the interests of shareholders, i.e., a higher level of leverage is expected to
reduce the agency costs of equity and thereby increase the efficiency of companies. Bearing
in mind that the stated hypothesis was confirmed in all models, it can be concluded that
the existence of debt in the capital structure represents a useful mechanism for controlling
the opportunistic behavior of managers and acts as an incentive for managers to act more
in accordance with the interests of the owners. However, when leverage becomes very
high, the disciplining effect of debt can disappear. By confirming research hypothesis H
2
,
which assumes a non-linear relationship between leverage and the efficiency of companies,
the negative effect of very high leverage on the efficiency of companies in the Republic of
Serbia was identified. Very high leverage can limit a company’s flexibility and affect the
company’s investment activities in such a way that it significantly limits or directs it to very
risky projects, which increases the expected costs of bankruptcy and causes the loss of the
disciplinary effect of debt. The research results are in accordance with the predictions of
the agency cost theory that the existence of debt in the capital structure reduces the agency
costs of equity in a way that encourages or limits managers to behave more in accordance
with the interests of owners. Agency costs caused by conflicts of interest between owners
and managers or owners and creditors will give rise to resource misallocation and potential
output will be sacrificed [
13
], which will cause a lower level of efficiency compared to
companies that have minimized these costs.
The research results are partly in agreement with other empirical research studies.
Fernandes, Vaz and Monte [44] determined a positive and statistically significant effect of
leverage on the efficiency of companies in Portugal, with the fact that in the mentioned
research, short-term leverage was used to express the capital structure of companies. How-
ever, bearing in mind that companies in the Republic of Serbia also predominantly rely on
short-term rather than long-term debt [
53
], the results are not entirely incomparable. Mar-
garitis and Psillaki [
13
] found a positive and significant effect of leverage on the efficiency
of companies in France. The cited authors show that debt is more significant for companies
operating in industries with fewer growth opportunities since the effect of debt on efficiency
is greater for companies in traditional industries (chemical and textile). Margaritis and
Psillaki [
45
] confirm the positive and significant effect of leverage on efficiency in New
Zealand companies as well. The results of Margaritis and Psillaki [
45
] show a positive and
significant effect of leverage on efficiency even in the case of quadratic leverage, which
shows that the determined effect remains positive in the entire relevant range of leverage
values. Ankamah-Yeboah et al. [
43
] confirm that the agency cost hypothesis holds in the
Mediterranean aquaculture sector such that leverage has an inverted U-shaped relationship
with performance. This implies that increasing leverage increases efficiency, but efficiency
begins to decrease at sufficiently high levels of leverage. The determined effect on efficiency
is confirmed with short-term, long-term and total leverage. Berger and Di Patti [
12
] also
identified a positive and significant effect of leverage on estimated efficiency. The estab-
lished positive effect remained present even at a very high level of leverage, but it should
be kept in mind that the research sample in this research consisted of banks, and that the
results of the research are not entirely comparable since banks have a different capital
Sustainability 2024,16, 869 19 of 25
structure compared to companies operating in other industrial sectors and because their
operations are highly regulated. Also, unlike Fernandes, Vaz and Monte [
44
], Margaritis
and Psillaki [
45
] and Margaritis and Psillaki [
13
], who used technical efficiency, Berger and
Di Patti [
12
], in their research, used profit efficiency as a measure of (inverse) agency costs.
Le and Phan [
46
] found a non-linear relationship between short-term leverage and com-
pany performance in Vietnam, i.e., that at a high level of leverage, the relationship between
leverage and company performance changes from positive to negative, with the authors
using ROE to express company performance. Nguyen and Tran [
36
], using a sample of
Vietnamese listed firms, found that there is a non-linear relationship between leverage and
firm performance (ROE). These findings are consistent with the agency cost hypothesis.
Regarding other variables, the expected positive and significant impact on efficiency in
all models was identified for firm size and asset tangibility. The identified positive impact
of size on company efficiency confirms the theoretical views that large companies take
advantage of the economy of large scale [
62
] and better coordinate their resources [
61
].
Contrary to the stated theoretical view, Fernandes, Vaz and Monte [
44
] and Margaritis and
Psillaki [
45
] identified a negative and statistically significant effect of size on the efficiency
of companies, while Margaritis and Psillaki [
13
] found that the effect of company size on
efficiency is not monotonic, i.e., the expected effect on efficiency is positive for smaller
companies but negative for large companies. Also, regarding asset tangibility, Margaritis
and Psillaki [
13
] shows a non-monotonic effect—negative at a low level, while at a high
level of asset tangibility, the effect is positive. Fernandes, Vaz and Monte [
44
] identified
a negative and statistically significant effect of asset tangibility on efficiency. Most of the
presented models show the expected negative effect of risk on the efficiency of companies,
while in comparable studies, this variable did not prove to be significant.
The agency cost hypothesis (H
1
) was confirmed by all models, so it can be concluded
that in the context of the analyzed companies, debt financing can act as an internal gover-
nance mechanism in constraining managers’ misuse of resources, thus reducing agency
costs and contributing to improvement in the company’s performance.
Agency costs might be significantly higher in countries with weak legal systems and
poor investor protection; therefore, corporate governance matters more in these coun-
tries [
73
,
74
]. Emerging markets are prone to managerial discretion to a greater extent
compared to Anglo-American countries. The managers in these economies tend to manage
funds inefficiently, and this directly effects firm performance [
38
] (p. 2). The opportunistic
behavior of managers can be curtailed through a good set of internal and external corpo-
rate governance principles. Leverage is considered an agency-mitigating mechanism as
outsiders monitor the actions of managers with respect to efficient contracting [
38
] (p. 4).
An increase in leverage provides greater incentive for lenders to monitor managers’ actions
and decisions more closely, reducing agency costs [
37
] (p. 140). Emerging markets provide
an excellent laboratory to test the governance potential of debt, given that the shareholders
of emerging market firms typically suffer from misaligned managerial incentives, ineffec-
tive legal protection [
75
] and underdeveloped markets for corporate control. Debt should
create value for firms with high expected agency costs if the use of debt directly reduces
overinvestment or allows firms to signal that they do not or will not overinvest [41] (p. 4).
However, although the application of the Hausman test proved that the FE model is
consistent in the estimation of both efficiency models (using the COLS and SFA methods)
and H
2
was proved by the FE model, the obtained results should be taken with some
caution. One of the limitations of this research refers to the use of total leverage as a
proxy for capital structure. Companies in developing countries have a very high degree of
participation of short-term financing sources in the capital structure [53,72]. Not all forms
of debt are equally likely to curtail overinvestment. For instance, with short-term debt,
managers must frequently face the scrutiny of capital markets to refinance principal [
41
]
(p. 6). Therefore, it would be very important in future research to separately analyze the
impacts of short-term leverage and long-term leverage on companies’ performance, as well
Sustainability 2024,16, 869 20 of 25
as whether the established effects change at extremely high values of these indicators since
this could potentially shed a different light on the research results and their implications.
5. Conclusions
A company’s operations are affected from an internal perspective by the relationship
between participants in the governance system, shareholders, creditors and employees, and
the external aspect of corporate governance is focused on the relationship between the com-
pany and external stakeholders, namely the governments of countries, state authorities and
the local community in which the company operates. The role of all the abovementioned
participants in their interaction varies significantly between countries, but there is a general
agreement that modern economic societies cannot effectively perform their activities while
simultaneously ignoring the interests of interest groups [
76
] (p. 2). As the main engine of
national economic development, industrial enterprises generate high GDP growth while
causing numerous negative impacts for the ecological environment [
77
]. Corporate social
responsibility is seen as necessary to enable businesses to satisfy the demands of changing
times and achieve sustainable growth [
78
] (p. 243). In this competitive world, every nation
tries to acquire sustainable economic solvency. For this, rapid economic growth via the
elevation of the production level is a prerequisite [
79
] (p. 166). Financial development
encourages the transformation of savings into investment, which leads to the inflow of
capital to new types of industries, eliminates backward industries and promotes industrial
upgrading [
80
] (p. 4710). In the process of economic development, traditional innovation
activities focus on improvements in production efficiency and reductions in costs, and
the input and output of innovation focus on the technical level and obey the mainstream
economic analysis paradigm [80] (pp. 4697–4698).
At the heart of corporate governance literature is the effect of capital structure impact
on firm performance. This relationship is described by what is called the agency cost the-
ory [
43
] (p. 372). The idea of agency relationships emphasizes that managers, stockholders,
bondholders and other parties act in their own self-interest and that costly conflicts may
arise due to these self-interests [
39
] (p. 74). From the agency theory perspective, strong
corporate governance plays an important role in protecting shareholders in general and
should therefore result in lower agency costs [
81
]. To solve the agency problem, various
governance mechanisms have been devised such as providing equity ownership and com-
pensation to managers, monitoring using boards of directors/large shareholders, the use of
debt financing, discipline via capital markets and the managerial labor market, the market
for corporate control and so on [
37
] (p. 135). With effective corporate governance mecha-
nisms, the agency cost can be curtailed while greater firm performance is simultaneously
achieved [38] (p. 6).
The choice of how to supply capital to a firm is an important decision [
43
] (p. 368).
Hence, this research focused on the impact of capital structure on a company’s performance;
more precisely, the effect of the leverage on the estimated efficiency of companies was
examined in order to verify the predictions of the theory of agency costs. According to
the theory of agency costs, debt can represent an important mechanism of controlling the
opportunistic behavior of managers, which encourages and/or constrains managers to
act in accordance with owners’ interests rather than their own. According to the premise
of agency costs, a higher level of leverage reduces the agency costs of equity caused by
the conflict of interest between owners and managers and contributes to increasing the
efficiency of companies. Since agency costs of equity inevitably arise as a consequence
of the separation of ownership and management (control), the goal is to minimize these
costs. Bearing in mind that agency costs are real like all other costs, a significant level of
these costs leads to resource misallocation and the loss of potential output, which leads to a
lower level of efficiency compared to companies that have minimized these costs.
The results of this research confirmed that a higher level of leverage represents a
significant mechanism for improving the efficiency of companies. The existence of debt in a
company’s capital structure motivates company managers to efficiently use the company’s
Sustainability 2024,16, 869 21 of 25
resources since debt creates an obligation to return, and failure to fulfill these obligations
can result in bankruptcy, which also causes managers to lose their position, power and
employment. However, bearing in mind that very high levels of debt in a company’s
capital structure generate another type of agency costs, i.e., agency costs of debt, which
arise due to conflicts of interest between a company’s owners and creditors, the expected
effect of a very high level of leverage on the efficiency of companies was examined. The
research results showed that the effect of leverage on a company’s efficiency is non-linear,
that is, it is expected that a sufficiently high level of leverage will negatively affect the
company’s efficiency. The research results indicate that the use of debt is important for
improving the efficiency of companies in mature industries but that its application requires
caution since at high levels of leverage the disciplining effect of debt is not sustainable.
High levels of leverage lead to the risk of default and increase the probability of bankruptcy
and thus the growth of expected bankruptcy costs; on the other hand, it significantly affects
the limitation of the investment activities of the company, which negatively affects the
growth and competitiveness of the company. Regarding o other variables, the expected
positive and significant impact on efficiency in all models was identified for firm size and
asset tangibility. The identified positive impact of size on company efficiency confirms the
theoretical views that large companies take advantage of the economy of large scale [
63
]
and better coordinate their resources [
61
]. Tangible assets are easily monitored and provide
good collateral and therefore tend to mitigate agency conflict [13].
The research results add to the empirical literature on agency cost theory by providing
useful insights into how debt, as one of the internal mechanisms of corporate governance,
can help mitigate agency costs and thereby contribute to improving company performance.
Agency costs might be significantly higher in countries with weak legal systems and poor
investor protection [
73
]. Emerging markets are prone to managerial discretion to a greater
extent compared to Anglo-American countries [
38
] (p. 2). Leverage is considered an agency-
mitigating mechanism as outsiders monitor the actions of managers with respect to efficient
contracting [
38
] (p. 4). Increase in leverage provides greater incentive for lenders to monitor
managers’ actions and decisions more closely, reducing agency costs [
37
] (p. 140). Given
that shareholders of emerging market firms typically suffer from misaligned managerial
incentives and ineffective legal protection, emerging markets provide an excellent labora-
tory for testing the potential of debt management [
75
]. Confirmation of the agency costs
hypothesis shows that the choice of capital structure for a firm is an important decision that
can have practical implications for composing the capital structure in emerging markets. It
can be concluded that in the context of the companies analyzed, debt financing can act as
an internal governance mechanism in constraining managers’ misuse of resources, thereby
reducing agency costs and contributing to the improvement of company performance. The
aforementioned conclusions can be very significant guidelines for the composition of the
capital structure of companies operating in mature industries and contribute to improving
the efficiency of a company by making adequate decisions about its capital structure.
In most studies on the relationship between capital structure and company perfor-
mance, accounting indicators calculated based on financial statements (ROA, ROE), fol-
lowed by market performance measures (EPSs) and Tobin’s Q indicator, which combines
accounting and market values, were applied. Only a few empirical studies used efficiency
as a performance indicator [
12
,
13
,
43
–
45
]. Therefore, bearing in mind the advantage of an
efficiency analysis as a performance indicator compared to traditional financial indicators,
the results of this research can be considered significant.
One of the limitations of this conducted empirical research relates to data on the
ownership structure of joint stock companies in the Republic of Serbia. Since the data
on the ownership share of the largest shareholder, which was used for the ownership
concentration variable, were only available for the last year of the research period (2020), it
potentially limited the achievement of significant research results regarding the effect of
ownership concentration on the efficiency of companies since the mentioned variable did
not prove to be significant in any model. However, similar limitations were identified in
Sustainability 2024,16, 869 22 of 25
other research studies [
12
], and the reason why the mentioned variable, with a significant
limitation, was retained in this research is that the ownership structures of companies in
developing countries mostly show stability over time. Another limitation of this research is
related to the research sample. The research sample was defined based on the theoretical
framework of the research, and in order to represent an adequate laboratory for testing the
developed research hypotheses, it was necessary to fulfill various requirements that arose
from the defined research context. It was necessary for the companies to be in the form of
joint-stock companies since the relationship between the stockholders and the manager of
a corporation fit the definition of a pure agency relationship [
6
] (p. 309). Also, bearing in
mind that the period of analysis was very long (2006–2020), during the observed period, the
values of the size criterion changed significantly for some companies, i.e., companies moved
into different categories according to this criterion, but during this period in the Republic
of Serbia, the legally defined criteria for determining the size of companies, as well as their
reference values [
60
], also changed. Therefore, although the agency costs of the separation
of ownership and management are more pronounced in large, organizationally complex
companies, and bearing in mind that some authors point out that agency problems can also
occur in small- and medium-sized companies that employ professional managers [
82
,
83
],
the sample was not limited by the size of the companies, but size was used as one of
the control variables in the model. On the other hand, bearing in mind that an efficiency
analysis was used to assess the performance of companies, it was necessary that the sample
comprise companies operating in the same conditions and applying predominantly similar
production technologies. Therefore, the empirical research focused on traditional, mature
areas of the manufacturing industry. It would be significant to conduct similar research on
companies operating in other growing areas of the industry since such companies, due to
greater opportunities for growth, have different capital requirements than firms in mature
industries. Therefore, it would be important to test whether the disciplining effect of
debt, which was confirmed for companies operating in mature areas of the manufacturing
industry, was also significant for companies operating in growing areas, such as the areas
of computer, electronic and optical product production.
In addition to the research sample which, due to the observed context of the research,
was limited to a specific sample of companies that met all the defined criteria, one of the
limitations of this research also refers to the applied indicator that expresses the capital
structure of the analyzed companies. This research used total leverage as a proxy for capital
structure. Bearing in mind that companies in developing countries have very low long-
term leverage, in contrast to short-term leverage, which is quite high [
53
,
73
], in addition
to testing the disciplinary effect of debt and the impact on the performance of companies
in other areas, it would be very important in future research to separately examine the
impacts of short-term leverage and long-term leverage on company performance. Using
long-term leverage and short-term leverage as a proxy for capital structure could poten-
tially provide different results and conclusions about the impact of capital structure on
company performance, which would certainly cause different theoretical and practical im-
plications; therefore, it would be very important to investigate the proposed relationships
in future research.
Author Contributions: Conceptualization, A.S. and S.T.; methodology, A.S. and B.L.; software, A.S.
and B.L.; validation, S.T. and N.V.´
C.; formal analysis, A.S. and O.U.; investigation, A.S. and S.T.;
resources, A.S. and O.U.; data curation, S.T., B.L. and N.V. ´
C.; writing—original draft preparation, A.S.;
writing—review and editing, A.S., S.T., B.L. and O.U.; visualization, N.V. ´
C.; supervision, S.T. and
O.U.; project administration, B.L.; funding acquisition, A.S., S.T., B.L., O.U. and N.V. ´
C. All authors
have read and agreed to the published version of the manuscript.
Funding: This research received no external funding.
Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Not applicable.
Sustainability 2024,16, 869 23 of 25
Data Availability Statement: The data are available upon request from the corresponding author.
Conflicts of Interest: The authors declare no conflicts of interest.
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