How Firm and Industry Characteristics Affect Capital Structure of Unlisted SMEs: UK Empirical Evidence

DOI

10.2991/978-94-6463-350-4_33How to use a DOI?

Keywords

Capital Structure; Pecking Order Theory; SMEs

Abstract

This study aimed to provide further empirical studies on whether there is any significant relationship between firm industry characteristics and the short-term and long-term debt of the companies. The focus was to answer the question: Do the firm and industry characteristics such as profitability, size, growth, and asset structure affect both short-term and long-term debt of the unlisted SMEs in the UK? This was the ideal topic to be discussed because SMEs played a vital role in the sustainability of economic growth in the country, especially in the UK. Additionally, unlisted companies needed access to the international capital market like most larger and listed firms, so conducting research in this area was very useful. This study collected secondary data from the Financial Analysis Made Easy (FAME) database comprising financial information of public and private companies in the UK and Ireland. The study utilized 291,047 unlisted SMEs in the UK from 2008 to 2015 and used the OLS (ordinary least square) model as an analysis method. The resulting firm characteristics did affect the capital structure of unlisted SMEs. Only one must be consistent with the predictions of the four main hypotheses. Related to the industry characteristics, most industries found a significant relationship between the firm characteristics and the leverage ratio of the companies. Overall, the results indicated that most findings followed the Pecking Order Theory.

Copyright

© 2023 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Indah Permata Suryani
PY  - 2024
DA  - 2024/01/10
TI  - How Firm and Industry Characteristics Affect Capital Structure of Unlisted SMEs: UK Empirical Evidence
BT  - Proceedings of the International Conference on Entrepreneurship, Leadership and Business Innovation (ICELBI 2022)
PB  - Atlantis Press
SP  - 339
EP  - 354
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-350-4_33
DO  - 10.2991/978-94-6463-350-4_33
ID  - Suryani2024
ER  -