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

  • 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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File URL: http://www.cefage.uevora.pt/en/content/download/2600/35550/version/1/file/2011_11.pdf
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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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