What Do We Know about the Capital Structure of Small Firms?

Karin Jõeveer

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

Abstract: There are no stylized facts about the capital structure of small firms. Therefore, in this paper I use firm data from 10 Western European countries to contrast the sources of leverage across small and large firms. Specifically, I jointly evaluate the explanatory power of firm-specific, country of incorporation institutional, and macroeconomic factors. Using data that is more comprehensive in coverage than that used in the existing research, I confirm the stylized facts of the capital structure literature for large and listed firms, but I obtain contrasting evidence for smaller companies: First, the country of incorporation carries much more information for small firms supporting the idea that small firms are more financially constrained and face non-firm-specific hurdles in their capital structure choice. Second, using two different leverage measures I show that the relationship of firm size and tangibility to leverage is robust to the measure used for listed, but not for unlisted, firms.

Keywords: Capital structure; Publicly traded and privately hold companies; Europe. (search for similar items in EconPapers)
JEL-codes: G32 (search for similar items in EconPapers)
Date: 2005-12
New Economics Papers: this item is included in nep-cfn, nep-ent, nep-fin, nep-fmk and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: What do we know about the capital structure of small firms? (2013)
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