How Firm and Industry Characteristics Affect Capital Structure of Unlisted SMEs: UK Empirical Evidence

Indah Permata Suryani ()
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Indah Permata Suryani: Universitas Andalas, Department of Accounting, Faculty Economic and Business

A chapter in Proceedings of the International Conference on Entrepreneurship, Leadership and Business Innovation (ICELBI 2022), 2023, pp 339-354 from Springer

Abstract: Abstract This study aimed to provide further empirical studies on whether there is any significant relationship between firm industry characteristics and the short-term and long-term debt of the companies. The focus was to answer the question: Do the firm and industry characteristics such as profitability, size, growth, and asset structure affect both short-term and long-term debt of the unlisted SMEs in the UK? This was the ideal topic to be discussed because SMEs played a vital role in the sustainability of economic growth in the country, especially in the UK. Additionally, unlisted companies needed access to the international capital market like most larger and listed firms, so conducting research in this area was very useful. This study collected secondary data from the Financial Analysis Made Easy (FAME) database comprising financial information of public and private companies in the UK and Ireland. The study utilized 291,047 unlisted SMEs in the UK from 2008 to 2015 and used the OLS (ordinary least square) model as an analysis method. The resulting firm characteristics did affect the capital structure of unlisted SMEs. Only one must be consistent with the predictions of the four main hypotheses. Related to the industry characteristics, most industries found a significant relationship between the firm characteristics and the leverage ratio of the companies. Overall, the results indicated that most findings followed the Pecking Order Theory.

Keywords: Capital Structure; Pecking Order Theory; SMEs (search for similar items in EconPapers)
Date: 2023
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DOI: 10.2991/978-94-6463-350-4_33

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