search query: @journal_id 56 / total: 1032
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| Author: | Jordan, J. Lowe, J. Taylor, P. |
| Title: | Strategy and financial policy in UK small firms |
| Journal: | Journal of Business Finance and Accounting
1998 : JAN/MAR, VOL. 25:1-2, p. 1-27 |
| Index terms: | STRATEGY FINANCIAL POLICY SMALL BUSINESS UNITED KINGDOM |
| Language: | eng |
| Abstract: | There is growing evidence that firm strategy and capital structure are linked but most studies until now have been focused on large, publicly quoted firms, with little attention given to small and medium-sized enterprises (SMEs). A major proposition of the study is that both strategic and financial factors are necessary to explain chosen debt levels. The empirical question adopted for this work, given the best financial model of capital structure, is - does strategy provide any additional explanatory power ? Hence strategy and financial variables are seen as complementary rather than competing determinants of capital structure. There appears to be strong evidence supporting the proposition that competitive strategy affects the capital structure of SMEs. There is little evidence, however, of any impact from corporate strategic factors. The study also supports the notion that there is a 'pecking order' in SME financing and that variability in profits results in 'distress' borrowing. The study provides important empirical evidence to support work on the capital structure puzzle and the funding problems of SMEs. |
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