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On the Theory of Finance for Privately Held Firms

Author

Listed:
  • James S. Ang

    (Florida State University)

Abstract

This paper is a first attempt at differentiating the problems of finance of the privately held small businesses from their larger counterparts. Small businesses, though not concerned with the problems and opportunities associated with publicly traded firms, have different types of complexities, such as shorter expected life, presence of estate tax, intergenerational transfer problems, and prevalence of implicit contracts. Some standard problems like agency and asymmetric information are also more complex. The relatively high transaction costs faced by small businesses in all types of financial decisions also preclude a sizable subset of available choices.

Suggested Citation

  • James S. Ang, 1992. "On the Theory of Finance for Privately Held Firms," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 1(3), pages 185-203, Spring.
    • Handle: RePEc:pep:journl:v:1:y:1992:i:3:p:185-203
    as

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    References listed on IDEAS

    as
    1. James S. Ang, 1991. "Small Business Uniqueness and the Theory of Financial Management," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 1(1), pages 1-13, Spring.
    2. Berkovitch, Elazar & Kim, E Han, 1990. "Financial Contracting and Leverage Induced Over- and Under-Investment Incentives," Journal of Finance, American Finance Association, vol. 45(3), pages 765-794, July.
    3. Myers, Stewart C., 1977. "Determinants of corporate borrowing," Journal of Financial Economics, Elsevier, vol. 5(2), pages 147-175, November.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Finance ; Theory of Finance; Privately-Held; Small Business;
    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
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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