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

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  • Paulo Jorge Maçãs Nunes

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

  • Zélia Maria da Silva Serrasqueiro

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

  • Jacinto António Setúbal Vidigal Silva

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

Abstract

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.

Suggested Citation

  • Paulo Jorge Maçãs Nunes & Zélia Maria da Silva Serrasqueiro & Jacinto António Setúbal Vidigal Silva, 2011. "Are Capital Structure Decisions of Family-Owned SMEs Different? Empirical Evidence From Portugal," CEFAGE-UE Working Papers 2011_11, University of Evora, CEFAGE-UE (Portugal).
    • Handle: RePEc:cfe:wpcefa:2011_11
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    References listed on IDEAS

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    1. Mark T. Bradshaw & Scott A. Richardson & Richard G. Sloan, 2001. "Do Analysts and Auditors Use Information in Accruals?," Journal of Accounting Research, Wiley Blackwell, vol. 39(1), pages 45-74, June.
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    Cited by:

    1. Stavros H. Arvanitis & Irakleia S. Tzigkounaki & Theodoros V. Stamatopoulos & Eleftherios I. Thalassinos, 2012. "Dynamic Approach of Capital Structure of European Shipping Companies," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 5(3), pages 33-63, December.
    2. Song, Hua & Yang, Xuan & Yu, Kangkang, 2020. "How do supply chain network and SMEs’ operational capabilities enhance working capital financing? An integrative signaling view," International Journal of Production Economics, Elsevier, vol. 220(C).
    3. Rashid Khalil* & Dr. Mohd. Sollehudin Bin Shuaib & Dr. Suhaimi Bin Ishak, 2018. "Bank-SMEs Relationship: A Critical Review of Firm & Industry Specific Determinants Influencing Banks’ Performance," The Journal of Social Sciences Research, Academic Research Publishing Group, vol. 4(12), pages 777-791, 12-2018.
    4. Sardo, Filipe & Serrasqueiro, Zélia & Félix, Elisabete G.S., 2020. "Does Venture Capital affect capital structure rebalancing? The case of small knowledge-intensive service firms," Structural Change and Economic Dynamics, Elsevier, vol. 53(C), pages 170-179.

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    More about this item

    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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