Are Capital Structure Decisions of Family-Owned SMEs Different? Empirical Evidence From Portugal

Paulo Jorge Maçãs Nunes (macas@ubi.pt), Zelia Serrasqueiro (zelia@ubi.pt) and Jacinto António Setúbal Vidigal Silva (jsilva@uevora.pt)
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Paulo Jorge Maçãs Nunes: Management and Economics Department, Beira Interior University and CEFAGE-UÉ
Jacinto António Setúbal Vidigal Silva: Management Department, Évora University, and CEFAGE-UÉ

CEFAGE-UE Working Papers from University of Evora, CEFAGE-UE (Portugal)

Abstract: This study analyses if ownership structure is an important determinant of capital structure decisions, on basis of two sub-samples of family-owned and non-family owned SMEs, sing panel data models. The results suggest that family ownership is an important determinant for: i) the variations of short and long-term debt stimulated by the financial deficit; and ii) the rate of adjustment of short and long-term debt toward the respective target levels. The empirical evidence obtained in this study suggests that family-owned firms have the possibility to reach their target short and long-term debt ratios, corroborating the assumptions of Trade-Off Theory. Whereas non-family owned firms follow almost exclusively the behaviour forecasted by Pecking Order Theory, i.e., when internal finance is insufficient, those firms turn to short-term debt, and their variations of short-term debt are almost exclusively a consequence of the financial deficit.

JEL-codes: G32 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2011
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Citations: View citations in EconPapers (4)

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