Strategy and Financial Policy in UK Small Firms
AbstractThere is growing evidence that capital structure and firm strategy are linked but most studies to date have focused on large, publicly quoted firms, with little attention given to small and medium-sized enterprises (SMEs). A major proposition of the study is that both strategic and financial factors are necessary to explain chosen debt levels. The empirical question adopted for this work, given the best financial model of capital structure, is - does strategy provide any additional explanatory power? Hence strategy and financial variables are seen as complementary rather than competing determinants of capital structure. There appears to be strong evidence supporting the proposition that competitive strategy affects the capital structure of SMEs, but there is little evidence of any impact from corporate strategic factors. The study also supports the notion that there is a 'pecking order' in SME financing and that variability in profits results in 'distress' borrowing. This study provides important empirical evidence to support work on the capital structure puzzle and the funding problems of SMEs. Copyright Blackwell Publishers Ltd 1998.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Wiley Blackwell in its journal Journal of Business Finance & Accounting.
Volume (Year): 25 (1998-01)
Issue (Month): 1&2 ()
Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0306-686X
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Dong Xiang & Andrew C. Worthington & Helen Higgs, 2011. "Firm-level determinants and impacts of finance-seeking behaviour and outcomes for small and medium-sized enterprises (SMEs) in Australia," Discussion Papers in Finance finance:201115, Griffith University, Department of Accounting, Finance and Economics.
- Asimakopoulos, Ioannis & Athanasoglou, Panayiotis & Siriopoulos, Konstantinos, 2006. "External financing, growth and capital structure," MPRA Paper 16451, University Library of Munich, Germany.
- Ciarán mac an Bhaird & Brian Lucey, 2010. "Determinants of capital structure in Irish SMEs," Small Business Economics, Springer, vol. 35(3), pages 357-375, October.
- Degryse, H.A. & Goeij, P. C. de & Kappert, P., 2009.
"The Impact of Firm and Industry Characteristics on Small Firms' Capital Structure: Evidence from Dutch Panel Data,"
2009-009, Tilburg University, Tilburg Law and Economic Center.
- Degryse, H.A. & Goeij, P. C. de & Kappert, P., 2009. "The Impact of Firm and Industry Characteristics on Small Firms' Capital Structure: Evidence from Dutch Panel Data," Discussion Paper 2009-21, Tilburg University, Center for Economic Research.
- Mueller, Elisabeth & Zimmermann, Volker, 2006.
"The Importance of Equity Finance for R&D Activity: Are There Differences Between Young and OldCompanies?,"
ZEW Discussion Papers
06-14, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Mueller, Elisabeth & Zimmermann, Volker, 2008. "The importance of equity finance for R&D activity: are there differences between young and oldcompanies?," ZEW Discussion Papers 06-14 [rev.2], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Zimmermann, Volker & Mueller, Elisabeth, 2007. "The Importance of Equity Finance for R&D Activity: Are There Differences Between Young and OldCompanies?," ZEW Discussion Papers 06-014 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Mabhungu Isaac & Masamha Blessing & Mhazo Simbarashe & Jaravaza Divaris & Chiriseri Lloyd, 2011. "Factors influencing micro and small enterprises’ access to finance since the adoption of multi-currency system in Zimbabwe," E3 Journal of Business Management and Economics., E3 Journals, vol. 2(6), pages 217-222.
- Anjali Kumar & Manuela Francisco, 2005. "Enterprise Size, Financing Patterns, and Credit Constraints in Brazil : Analysis of Data from the Investment Climate Assessment Survey," World Bank Publications, The World Bank, number 7330, March.
- Hans Degryse & Peter Goeij & Peter Kappert, 2012. "The impact of firm and industry characteristics on small firms’ capital structure," Small Business Economics, Springer, vol. 38(4), pages 431-447, May.
- Brian Lucey & Colm KEarney & Ciaran MacAnBhaird, . "Culture and capital structure in small and medium sized firms," The Institute for International Integration Studies Discussion Paper Series iiisdp419, IIIS.
- Ali, Sharafat, 2013. "The Small and Medium Enterprises and Poverty in Pakistan: An Empirical Analysis," MPRA Paper 50506, University Library of Munich, Germany, revised Jul 2113.
- Mark Freel & Sara Carter & Stephen Tagg & Colin Mason, 2012. "The latent demand for bank debt: characterizing “discouraged borrowers”," Small Business Economics, Springer, vol. 38(4), pages 399-418, May.
- Maria Psillaki & Nikolaos Daskalakis, 2009. "Are the determinants of capital structure country or firm specific?," Small Business Economics, Springer, vol. 33(3), pages 319-333, October.
- Elisabeth Müller & Volker Zimmermann, 2009. "The importance of equity finance for R&D activity," Small Business Economics, Springer, vol. 33(3), pages 303-318, October.
- Ramachandran Azhagaiah & Raju Deepa, 2012. "Determinants of Profitability of Food Industry in India: A Size-Wise Analysis," Management, University of Primorska, Faculty of Management Koper, vol. 7(2), pages 111-128.
- Orens, Raf & Reheul, Anne-Mie, 2011. "Do CEO Demographics Explain Cash Holdings in SMEs?," Working Papers 2011/35, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.