Improving Municipal Enterprise Capitalization: Insights on Determining Factors—Evidence from Ukraine

The development of municipal services in cities and territorial communities is of crucial importance for the economic recovery of Ukraine. Municipal-owned enterprises lead in this as part of the local life support system. Municipal enterprises in Ukraine operate on a commercial basis and are regulated by the Commercial Code while often receiving funds from local budgets. Therefore, the problem of forming their capital and maintaining its effective structure is a very relevant issue. General economic and specific factors influence the capital structure formation of Ukrainian municipal-owned enterprises, among which domestic political factors are significant. These factors help to test the conformity of municipal enterprises’ capital formation process with two main capital theories: pecking order and trade-off theory. The study of enterprises sample showed a general non-compliance with the main postulates of both theories and a discrepancy in the financial factors influencing the capital structure of municipal-owned enterprises, which requires further scientific research.