Equity capital needs of growth SMEs: financial obligation or strategic intention ?

La demanda de capitales proprios de las PyME en fase de crecimiento: Imperativo financiero o intencion estratégica ?

Alain Marion () and Claire Faverjon ()
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Alain Marion: MAGELLAN - Laboratoire de Recherche Magellan - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon - Institut d'Administration des Entreprises (IAE) - Lyon
Claire Faverjon: MAGELLAN - Laboratoire de Recherche Magellan - UJML - Université Jean Moulin - Lyon 3 - Université de Lyon - Institut d'Administration des Entreprises (IAE) - Lyon

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Abstract: Usually, Small and Medium Sized Enterprises (SMEs) are supposed to raise equity capital when they are not able to finance growth by internal funds. Nevertheless, if we observe the financial behaviour of growth SMEs, financial constraint seems not to be the only determinant of raising equity capital. The paper investigates if the aim of managers is not also to have financial slack. We study 2161 SMEs localized in Rhône-Alpes in France. To measure the need of equity capital, we use free cash flows (cash flow less capital expenditure less change in working capital). The study finds three kinds of SMEs raising equity capital. Surprisingly, one kind of SMEs raises funds whereas they have positive free cash flows (that means that these SMEs have no needs of external funds).

Keywords: PME; financement; croissance; fonds propres; capacité d'autofinancement (search for similar items in EconPapers)
Date: 2016
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Published in Revue Internationale PME, 2016, 29 (1), pp.71-100

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01327231

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