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Capital structure in Colombian SMEs: a semi-systematic literature review from trade-off, pecking order, agency, and psychological empowerment perspectives

Author

Listed:
  • Zuray Andrea Melgarejo Molina

    (Universidad Nacional De Colombia)

  • Mayda Alejandra Calderon-Diaz

    (Universidad Nacional De Colombia)

  • Felipe Alejandro Torres-Castro

    (Universidad de los Andes)

Abstract

Introduction: Capital structure remains a central topic in corporate finance, particularly in emerging economies where institutional constraints, governance mechanisms, and managerial behavior influence financing decisions. Understanding capital structure in ColombianSMEs requires integrating multiple theoretical perspectives. Objective: To analyze the theoretical and empirical evidence on capital structure decisions in Colombian SMEs from the perspectives of Trade-Off Theory, Pecking Order Theory, Agency Theory, and Psychological Empowerment. Methodology: A semi-systematic literature review was conducted following the PRISMA 2020 guidelines. Searches were performed in Scopus and Web of Science between March and May 2025. The selection process included identification, screening, eligibility assessment, and inclusion, resulting in 27 studies for analysis. Results: No single theory fully explains financing decisions in Colombian SMEs. Trade-Off and Pecking Order theories explain leverage and financing preferences, Agency Theory highlights ownership structures and information asymmetries, and Psychological Empowerment emphasizes managerial autonomy and behavioral influences. Discussion: Capital structure decisions arise from the interaction of financial, governance, and behavioral factors shaped by firm characteristics and institutional conditions. Conclusions: A multidimensional perspective provides a more comprehensive understanding of capital structure decisions in Colombian SMEs. The study contributes by integrating financial, organizational, and behavioral explanations and identifying avenues for future research

Suggested Citation

  • Zuray Andrea Melgarejo Molina & Mayda Alejandra Calderon-Diaz & Felipe Alejandro Torres-Castro, 2026. "Capital structure in Colombian SMEs: a semi-systematic literature review from trade-off, pecking order, agency, and psychological empowerment perspectives," Revista Tendencias, Universidad de Narino, vol. 27(02), pages 292-315, July.
    • Handle: RePEc:col:000520:023331
    DOI: 10.22267/rtend.26272.305
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    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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