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Financial Strategies of Small, Public Firms: A Comparative Analysis with Small, Private Firms and Large, Public Firms

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  • Howard E. Van Auken
  • Tom Holman

Abstract

This study uses canonical correlation analysis to examine the Interrelationships among balance sheet accounts for 190 small, publicly traded corporations. The results suggest that small, public corporations manage risk with the concurrent use of cash and equity, use long-term assets as collateral for long-term debt, and use accounts payable and other current debt to finance receivables and Inventories. Small, public corporations have characteristics similar to both small, private businesses and large corporations, while having unique, Individual qualities. These findings can be attributed to the small, public corporation having greater access to the capital markets than the small, private business, but facing greater constraints than the large corporation In accessing those markets. These results Increase the understanding of the sources and uses of funds for the small, public corporations and Indicates that financing strategies tend to evolve as firms grow.

Suggested Citation

  • 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.
    • Handle: RePEc:sae:entthe:v:20:y:1995:i:1:p:29-41
    DOI: 10.1177/104225879502000102
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    References listed on IDEAS

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    1. Susan Coleman, 2002. "Small Firm Use of Debt: An Examination of the Smallest Small Firms," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 7(1), pages 51-76, Spring.
    2. Daphne Yiu & Jun Su & Yuehua Xu, 2013. "Alternative financing and private firm performance," Asia Pacific Journal of Management, Springer, vol. 30(3), pages 829-852, September.
    3. Gokalp, Omer N. & Lee, Seung-Hyun & Peng, Mike W., 2017. "Competition and corporate tax evasion: An institution-based view," Journal of World Business, Elsevier, vol. 52(2), pages 258-269.
    4. Ebben, Jay & Johnson, Alec, 2006. "Bootstrapping in small firms: An empirical analysis of change over time," Journal of Business Venturing, Elsevier, vol. 21(6), pages 851-865, November.
    5. Johansson Jeaneth M. & Malmstrom Malin, 2013. "The Business Model Transparency Paradox in Innovative Growth Ventures: Trade-offs between Competitive Advantages and Agency Costs," Entrepreneurship Research Journal, De Gruyter, vol. 3(2), pages 238-263, January.
    6. Maquieira, Carlos P. & Preve, Lorenzo A. & Sarria-Allende, Virginia, 2012. "Theory and practice of corporate finance: Evidence and distinctive features in Latin America," Emerging Markets Review, Elsevier, vol. 13(2), pages 118-148.

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