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Capital Structure and Small Growth Firms

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  • Edgar Norton

    (Fairleigh Dickinson University)

Abstract

Capital structure choices and preferences in small, rapidly growing corporations are examined. As much of capital structure theory involves variables not easily or practically quantified (e.g., preferences, motivations, agency costs, information asymmetries) a survey was designed in an attempt to gauge the relevance of several theories of capital structure. The survey was sent to 405 firms, taken from lists of successful high growth corporations; 27.2% returned usable responses. Analysis of the responses indicates that tax factors and management preferences have major impacts on capital structure. Implications arising from agency cost, information asymmetry, and signaling theory apparently have little impact on capital structure choice and financing strategies of the responding firms.

Suggested Citation

  • Edgar Norton, 1991. "Capital Structure and Small Growth Firms," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 1(2), pages 161-177, Winter.
    • Handle: RePEc:pep:journl:v:1:y:1991:i:2:p:161-177
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    Cited by:

    1. Cardone Riportella, Clara & Casasola, María José, 2003. "What do we know about the financial behaviour of the Spanish SME?: an empirical analysis," DEE - Working Papers. Business Economics. WB wb033708, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    2. Susan Coleman, 2006. "Capital Structure in Small Manufacturing Firms: Evidence from the Data," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 11(3), pages 105-122, Fall.
    3. Romain FOGO PAWO, 2020. "déterminants objectifs de l’endettement en contexte de rationnement du crédit," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 11(2), pages 280-292, December.
    4. Tansel Yilmazer & Holly Schrank, 2010. "The Use of Owner Resources in Small and Family Owned Businesses: Literature Review and Future Research Directions," Journal of Family and Economic Issues, Springer, vol. 31(4), pages 399-413, December.
    5. Robert Baldock, 2016. "An assessment of the business impacts of the UK’s Enterprise Capital Funds," Environment and Planning C, , vol. 34(8), pages 1556-1581, December.
    6. Cardone Riportella, Clara & Casasola, María José & Samartín, Margarita, 2005. "Do banking relationships improve credit conditions for Spanish SMEs?," DEE - Working Papers. Business Economics. WB wb052806, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    7. Natacha Tréhan, 2002. "Usages de la société holding par des entreprises personnelles et familiales non cotées pratiquant la croissance externe," Revue Finance Contrôle Stratégie, revues.org, vol. 5(2), pages 143-162, June.
    8. Francisco Sogorb- Mira, 2002. "How Sme Uniqueness Affects Capital Structure: Evidence From A 1994-1998 Spanish Data Panel," Working Papers. Serie EC 2002-18, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    9. Romain FOGO PAWO & Nicodème KEMDONG TENEKEU, 2022. "Analyse de l'accès aux financements court terme de la PME camerounaise," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 13(1), pages 84-100, June.
    10. Catherine Thevenard-Puthod & Christian Picard, 2015. "Diversité des stratégies de croissance de l'entreprise artisanale et profil du dirigeant," Post-Print hal-01548383, HAL.
    11. Ed Vos & Carolyn Forlong, 1996. "The Agency Advantage of Debt over the Lifecycle of the Firm," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 5(3), pages 193-211, Fall.
    12. Howard E. Van Auken & Tom Holman, 1995. "Financial Strategies of Small, Public Firms: A Comparative Analysis with Small, Private Firms and Large, Public Firms," Entrepreneurship Theory and Practice, , vol. 20(1), pages 29-41, October.
    13. Romain FOGO PAWO, 2020. "les déterminants objectifs de l’endettement en contexte de rationnement du crédit," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 11(2), pages 280-292, December.

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    More about this item

    Keywords

    Capital Structure ; Capital ; Small Firm; Growth Firm;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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