Are the Implications of the Financial Growth Cycle Confirmed for Spanish Smes?

Abstract

The aim of this paper is to analyze whether some of the empirical implications of the financial growth cycle hold in a sample of Spanish SMEs. We use a sample of 5,944 observations for the year 2007 and test several hypotheses using MANOVA analysis. The results show that companies tend to have different financing structures depending on their age and size. Hypotheses about trade credit, short term debt and risk are confirmed with respect to age, as the younger companies tend to use proportionally more trade credit and short term debt, and are riskier. Size is also associated in the expected way with trade credit, relative trade credit and relative short-term financial debt. On the other hand hypotheses about equity and the financing deficit are not confirmed. The effect of a pecking order behaviour over a long period of time may provide an explanation of why these two hypotheses are not confirmed.

Capital structure dynamics among SMEs: Swedish empirical evidence

“…While the EQ and LTD ratios tend to increase across the life cycle stages, the STD ratio tends to decrease. The negative relationship between firm age and debt capital supports H1 and is in line with previous studies with a similar focus (Petersen and Rajan, 1994;Berger and Udell, 1998;López-Gracia and Sánchez-Andújar, 2007;La Rocca et al, 2011;Sánchez-Vidal and Martin-Ugedo, 2012;Tian et al, 2015). Consistent with H2 and H3, the SME financing pattern is influenced by size and industry affiliation, confirming Talberg et al (2008) and Mac an Lucey (2010, 2014).…”

“…H2 is based on Rajan and Zingales (1995), Chittenden et al (1996), Cassar (2004, López-Gracia and Sánchez-Andújar (2007) and Mac an Bhaird and Lucey (2010). H3 is based on Myers (1984), Harris and Raviv (1991), Talberg et al (2008), Sánchez-Vidal and Martin-Ugedo (2012) and Mac an Bhaird and Lucey (2014).…”

Female CEOs, Returns and Risk in Spanish Publishing Firms

“…The control variables are (Sánchez‐Vidal and Martín‐Ugedo, ; Bigelli et al ., ; Hernández‐Cánovas et al, ): Return on assets, firm size and firm age (defined above), Intangible assets (calculated as the sum of intangible asset divided by total assets), the cost of the debt, defined as the ratio of financial expenses to total debt, and the interest coverage ratio, measured as earnings before interest and taxes divided by financial expenses.…”

Demand for debt and equity before and after the financial crisis

“…These resources are commonly supplemented by short-term debt, but may also include long term loans which are often secured on the personal assets of the firm owner (Mac an Bhaird and Lucey, 2010). Younger firms have difficulty accessing debt, however, because of a lack of credit history (Diamond, 1989, Sánchez-Vidal andMartín-Ugedo, 2012). Additionally, smaller firms have relatively greater agency costs, and consequently greater costs of alleviating information asymmetries due to economies of scale (Bartholdy andMateus, 2008, Daskalakis andPsillaki, 2008).…”