DETERMINANTS OF THE FIRM’S CAPITAL STRUCTURE - THE CASE OF THE VERY SMALL ENTERPRISES

Evaldo Barbosa () and Cristiana de Castro Moraes
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Cristiana de Castro Moraes: Espírito Santo State Government

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Abstract: This paper seeks empirically to identify the determinants of the very small firms’ financial leverage. This is important because both these enterprises have been under-researched and research in the area has been troubled by samples biased towards very large enterprises. Results support hypotheses that size, growth, operational cycle and entrepreneur’s risk tolerance are positively and business risk, asset composition, profitability and inflation negatively associated with financial leverage. Additionally, there is support for a hypothesized relationship with industry but not with enterprise age. To achieve a wider understanding of these relationships, financial leverage is studied in combination with own working capital.

Keywords: Financial Leverage; Capital Structure; Financial Structure; Small Business Finance (search for similar items in EconPapers)
JEL-codes: G32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn, nep-ent, nep-mfd, nep-pke and nep-rmg
Date: Written 2003-02-07
Note: Type of Document - Adobe Acrobat(pdf); pages: 73 ; figures: included
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http://129.3.20.41/eps/fin/papers/0302/0302001.pdf (application/pdf)

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