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


Author Info

  • Zélia Serrasqueiro

    (Management and Economics Department, Beira Interior University and CEFAGE-UE)

  • Paulo Maçãs Nunes

    (Management and Economics Department, Beira Interior University and CEFAGE-UE)

  • Jacinto Vidigal da Silva

    (Management Department, Évora University, and CEFAGE-UE)


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.

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Bibliographic Info

Paper provided by University of Evora, CEFAGE-UE (Portugal) in its series CEFAGE-UE Working Papers with number 2011_11.

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Length: 39 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:cfe:wpcefa:2011_11

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Keywords: Family-Owned SMEs; Long-Term Debt; Non-Family Owned SMEs; Panel Data Models; Short-Term Debt.;

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