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| Author: | Bhaird, C. mac an Lucey, B. |
| Title: | Determinants of capital structure in Irish SMEs |
| Journal: | Small business economics
2010 : OCT, VOL. 35:3, p. 357-375 |
| Index terms: | capital structure of companies small business entrepreneurship |
| Freeterms: | research and development Ireland |
| Language: | eng |
| Abstract: | This paper showcases an empirical examination of key factors of the capital structure of a sample of 299 Irish small and medium-sized enterprises (SMEs). The results indicate that age, size, level of intangible activity, ownership structure and the provision of collateral are essential determinants of the SMEs' capital structure. A generalization of Zellners ( Journal of the American Statistical Association 57, 348368, 1962) seemingly unrelated regression (SUR) approach is utilized to inspect industry effects and to test the stability of parameter estimates across sectors. We find that the impact of age, size, ownership structure and provision of collateral is uniform across industry sectors, indicating the universal information asymmetries effect. Firms overcome the lack of adequate collateralisable firm assets in two different ways: by giving personal assets as collateral for business debt, and by using additional external equity to finance research and development projects. |
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