The influence of governance on the capital structure of SMEs in the local apparel productive arrangement

Raquel Souza Ramos, Joséte Florêncio dos Santos and Kliver Lamarthine Alves Confessor

Revista de Gest??o, 2025, vol. 32, issue 4, 316-331

Abstract: PurposeThis study examines how governance mechanisms influence the capital structure of small- and medium-sized enterprises (SMEs) within the Local Apparel Productive Arrangement of the Hinterlands of Pernambuco.Design/methodology/approachBy analyzing the governance in mitigating informational asymmetry, this study investigates its impact on credit access. A non-parametric Mann–Whitney test was employed to compare report production between companies that obtained bank loans and those that did not. Additionally, a structural equation model is applied to assess the relationship between governance adoption and credit accessibility.FindingsThe results indicate that firms with bank loans produce more reports, suggesting a positive link between transparency and financial credibility. Moreover, governance adoption reduces informational asymmetry and facilitates credit approval.Originality/valueThis study contributes to literature by providing empirical evidence on the effects of governance mechanisms on SMEs’ capital structure of SMEs. The findings offer practical insights for entrepreneurs, enabling them to evaluate appropriate governance structures to enhance their financing decisions. Furthermore, the results support policymakers in designing strategies for improving SMEs’ access to debt financing. By emphasizing the role of governance in SMEs, this study underscores its importance in strengthening management quality and financial decision-making. Increased transparency can enhance the trust between companies and financial institutions, ultimately fostering sustainable business growth.

Keywords: Corporate governance; Capital structure; SMEs; Local productive arrangement (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/rege/article/32/4/316/1307 ... nance-on-the-capital (text/html)
https://www.emerald.com/rege/article-pdf/32/4/316/ ... e-03-2025-0053en.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:regepp:rege-03-2025-0053

DOI: 10.1108/REGE-03-2025-0053

Access Statistics for this article

Revista de Gest??o is currently edited by Prof. Luis Hernan Contreras Pinochet

More articles in Revista de Gest??o from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().