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Equity And Rate Of Return: Are Small Manufacturing Firms Handicapped By Their Own Success?

Author

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  • Bernard Paranque

    (Banque de France)

Abstract

From a french pannel of manufacturing firm, this article aims to show that the terms of the debate on the capitalization of small manufacturing firms ought to be clarified. These firms are often said to be undercapitalized, because in relative terms their capital spending is often similar, or even greater, than that of their larger competitors. This means that their earnings are depleted by the higher depreciation charges for maintaining their fixed assets. Undercapitalization is also due to the fact that firms in this category have poor access to capital markets.

Suggested Citation

  • Bernard Paranque, 1995. "Equity And Rate Of Return: Are Small Manufacturing Firms Handicapped By Their Own Success?," Finance 9508002, EconWPA, revised 29 Oct 2000.
  • Handle: RePEc:wpa:wuwpfi:9508002
    Note: 8 pages, pdf
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    File URL: http://econwpa.repec.org/eps/fin/papers/9508/9508002.pdf
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    Keywords

    equity; rate of retrurn; accumulation; sme's;

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • G - Financial Economics

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