The influence of managerial characteristics on external financing preferences in smaller enterprises. The case of Malaysian micro-sized enterprises

Shafie Mohamed Zabri, Kamilah Ahmad and Siti Azirah Adonia

Cogent Business & Management, 2021, vol. 8, issue 1, 1912524

Abstract: Previous studies have identified various factors underlying firm financing structure especially in large firms. However, few have attempted to document the reasons for financing preferences among microenterprises in developing countries. Employing a managerial-based theory, this study explores the financing preferences of microenterprises and factors that influence their preference towards external financing. Based on 310 valid replies to a questionnaire survey conducted among Malaysian microenterprises, it finds a clear financing hierarchy where internal funding sources are preferred to external finance. It also underscores the important role of external financing sources. Applying structural equation modelling, the study demonstrates that information on external financing, level of internal funding, growth intention, networking ties and owner’s experience exert significant effects on external financing preferences. In addition, business age and the relative location of a business from banks and/or finance agencies appear to have a significant confounding influence on the results. The empirical evidence contributes to the limited but growing literature on financing preferences by revealing the simultaneous effects of managerial characteristics on financing preferences in the context of microenterprises.

Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/23311975.2021.1912524 (text/html)
Access to full text is restricted to subscribers.

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:taf:oabmxx:v:8:y:2021:i:1:p:1912524

Ordering information: This journal article can be ordered from
http://cogentoa.tandfonline.com/journal/OABM20

DOI: 10.1080/23311975.2021.1912524

Access Statistics for this article

Cogent Business & Management is currently edited by Len Tiu Wright and Tahir Nisar

More articles in Cogent Business & Management from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().