An Empirical Analysis of the Financial Structure of Small and Large Australian Manufacturing Enterprises
Scott Holmes and
Additional contact information
Scott Holmes: Queensland University of Technology
Pam Kent: University of Queensland
Journal of Entrepreneurial Finance, 1991, vol. 1, issue 2, 141-154
The small business literature frequently refers to the concept of a “finance gap” in order to explain differences in the capital structures of small and large firms. However, little evidence, if any, exists to support this “finance gap” explanation. This paper, while canvassing the finance gap literature, offers an alternative explanation —Myers’ Pecking Order Framework. This framework focuses on management funding preferences as a major factor in the capital structure of firms. In order to test the applicability of this view, a mail survey was conducted for small and large firms operating in the Metal Trades sub-sector of the Australian Manufacturing sector. The responses provided detailed information on the types of debt used by small and large firms. While recognizing the limitations of mail surveys and the restricted information permissible in such surveys, the results provide a unique opportunity to compare the capital structures of small and large firms. Overall, the results support the proposition that capital structure is influenced by Myers’ Pecking Order Framework and that differences between small and large firms may be attributed to small firms operating under a “constrained” pecking order.
Keywords: Manufacturing; Capital Structure; Small Firm; Australia (search for similar items in EconPapers)
JEL-codes: L60 L25 G32 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (13) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pep:journl:v:1:y:1991:i:2:p:141-154
Access Statistics for this article
More articles in Journal of Entrepreneurial Finance from Pepperdine University, Graziadio School of Business and Management Contact information at EDIRC.
Series data maintained by Craig Everett ().