Trade credit has been shown to be an important source of short-term finance for smaller firms but small firms are also suppliers of trade credit. There is little empirical evidence on the credit granting decisions of small firms. Previous empirical work (Petersen and Rajan, 1997; and Ng, Smith and Smith, 1999) has focused on credit granting and investment in accounts receivable in larger firms. In this paper we look at the influences on credit granting for the smallest firms, using a sample of firms with an average of 10 employees. As in previous studies we find that product and demand characteristics influence credit terms. Moreover, we find evidence that firm size affects credit extension choices directly by setting limits on the possibilities for economies of scale, but it also impacts indirectly by affecting the firm's access to finance and its bargaining strength "vis-à-vis" suppliers. The dominant position of larger customers in bargaining with small suppliers constrains the impact of other factors on the firm's choice of credit terms. Small firms are also under pressure to conform to industry norms, although lack of resources can be a limiting factor. Constrained firms may make use of two-part terms in an attempt to improve their cashflow. Copyright Blackwell Publishers Ltd 2002.

This empirical study investigates the characteristics of a cohort of 166 small businesses which were set up during a period of recession by founders, all of whom had experienced a period of unemployment prior to start‐up. These new ventures were appraised and supported by their local Training & Enterprise Council (TEC) prior to start‐up and in their formative months. This paper analyses the appropriateness and success of support services in the light of an empirical investigation of the factors which appear to impact on survival/failure and growth prospects of surveyed businesses. Comparisons are made between those businesses which are still trading and those which have ceased trading and between businesses with high and low growth expectations. Factors which are investigated include the founders’ personal background and experience; reasons put forward for start‐up; early problems encountered in running a business; business objectives and expectations.

MICHAELJ. PEEL IS A LECTURER IN accountancy and finance at Cardiff Business School, University of Wales, and Nicholas Wilson is Professor of Credit Management at the University of Bradford, England. Very little research has been conducted on the capital budgeting and working capital practices of small firms. The purpose of this paper is to present the results of a preliminary study on the working capital and financial management practices of a sample of small firms located in the north of England. In general, the results of the survey indicated that a relatively high proportion of small firms in the sample claimed to use quantitative capital budgeting and working capital techniques and to review various aspects of their companies' working capital. In addition, the firms which claimed to use the more sophisticated discounted cash flow capital budgeting techniques, or which had been active in terms of reducing stock levels or the debtors' credit period, on average tended to be more active in respect of working capital management practices. It is hoped that the issues raised will stimulate further theoretical and empirical contributions on this neglected and important area of small business research.

We explore the vexing question of whether family firms are more likely to survive than nonfamily firms, focusing on the role of board composition. Utilizing a unique data set of over 700,000 private family and nonfamily firms in the U.K. during 2007–2010, we find that family firms are significantly less likely to fail than nonfamily firms. We identify the board characteristics associated with survival/failure in all firms and determine that it is these characteristics that are important in explaining the lower failure probability of family firms. We conclude with an agenda for further research on boards and family firm survival.

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Asymmetric information models predict a 'pecking order' which reflects a combination of owner-manager preferences and external capital supply constraints whenever insiders know more about the true value of the firm's prospects than outsiders. The pecking order results in retained earnings being the most preferred source of finance, then debt and finally the issue of new shares to outsiders. Using a sample of 629 UK SMEs over the five-year period from 1990 to 1995 we find evidence consistent with a pecking order in which retained equity is preferred over debt. As expected, the evidence of a pecking order was particularly strong in respect of the closely-held firms in our sample. Copyright Blackwell Publishers Ltd 2002.

This paper explores the impact of employee ownership on employee attitudes, using attitudinal data obtained from four UK bus companies which had adopted the ESOP form of employee share ownership. After reviewing the recent UK literature, the paper highlights the findings from US literature that a 'sense of ownership' is an important intervening variable between actual ownership and attitudinal change, and that opportunities for participation in decision-making are more important than ownership per se in generating feelings of ownership. The paper incorporates these possibilities in using a two-stage ordered probit model to explore the relationships between ownership and attitudinal outcomes. The findings support intrinsic and instrumental models of ownership, and indicate that feelings of ownership are significantly associated with higher levels of commitment and satisfaction.

1 The agonist activities of a range of prostaglandin analogues on smooth muscle preparations sensitive to prostaglandin E2 (PGE2) have been investigated. When necessary thromboxane-like activity was eliminated using the thromboxane receptor antagonists EP 045 and EP 092. 2 On the bullock iris sphincter, rat stomach fundus and guinea-pig trachea, (±) w-tetranor-16-pchlorophenoxy PGE2 (ICI 80205) and 16,16-dimethyl PGE2 were more active contractile agents than PGE2, whereas for relaxant activity on the cat trachea, guinea-pig trachea and dog hind limb arterial vessels in vivo the order of potency was reversed. 1I -Deoxy PGEI exhibited greater relaxant than contractile activity when compared to PGE2.3 Iloprost and 6a-carba-A6,6aPGII (potent mimetics of PGI2) showed high contractile activity on the PGE-sensitive preparations. PG12 was less active and another potent PGI2 mimetic, ZK 96480, showed only very weak activity. When tested, the dibenzoxazepines SC 19220 and SC 25191 blocked the contractile actions of iloprost and 6a-carba-A6,'PGI, and those of PGE2 and 16,16-dimethyl PGE2 to similar extents. Each of the PG12 analogues showed weak activity on the relaxant systems.4 On the proximal portion of the ascending colon of the rat, PGI2, iloprost, 6a-carba-A6'IPGII and ZK 96480 always inhibited spontaneous activity at nanomolar concentrations. PGE2 and PGE, showed weak contractile activity. The distal portion of the ascending colon was more responsive to the contractile action of PGE analogues: both iloprost and 6a-carba-A6',PGI, showed evidence of contractile activity, whereas PGI2 and ZK 96480 always inhibited spontaneous activity. 5 Evidence was obtained that the rat stomach fundus also contains a PGF receptor; (± ) w-tetranor-16-m-trifluoromethylphenoxy PGF2A (ICI 81008) acted as a specific agonist. PGF2, and its w-tetranor-16-p-fluorophenoxy analogue produced a higher maximum response that ICI 81008 probably due to their additional agonist action at the PGE receptor. 6 The data support the hypothesis that there are two subtypes of the PGE receptor. ZK 96480 has minimal activity on both receptor subtypes and appears to be a highly specific PGI2 mimetic.