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Determinants Of The Firm’S Capital Structure - The Case Of The Very Small Enterprises

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  • EVALDO GUIMARÃES BARBOSA

    (Brazilian Federal Tax Secretariat)

  • CRISTIANA DE CASTRO MORAES

    (Espírito Santo State Government)

Abstract

This paper seeks empirically to identify the determinants of the very small firms’ financial leverage. This is important because both these enterprises have been under-researched and research in the area has been troubled by samples biased towards very large enterprises. Results support hypotheses that size, growth, operational cycle and entrepreneur’s risk tolerance are positively and business risk, asset composition, profitability and inflation negatively associated with financial leverage. Additionally, there is support for a hypothesized relationship with industry but not with enterprise age. To achieve a wider understanding of these relationships, financial leverage is studied in combination with own working capital.

Suggested Citation

  • Evaldo Guimarães Barbosa & Cristiana De Castro Moraes, 2003. "Determinants Of The Firm’S Capital Structure - The Case Of The Very Small Enterprises," Finance 0302001, University Library of Munich, Germany, revised 06 Oct 2003.
  • Handle: RePEc:wpa:wuwpfi:0302001
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    More about this item

    Keywords

    Financial Leverage; Capital Structure; Financial Structure; Small Business Finance;
    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

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