Capital structure, debt maturity, and financial crisis: empirical evidence from SMEs

Financial Constraints and the Sustainability of Dividend Payout Policy

“…2003/361, we identify SMEs as firms with fewer than 250 employees and annual turnover below or equal to 50 million euros. The former contains financial and administrative information about Italian manufacturing companies, and current literature has widely attempted to investigate financial constraints (e.g., [5,13]), while the latter proposes the evaluation of their solvency through credit rating scores [34]. In particular, following Falavigna (2012) [34], CERIS Rating estimates the scores by means of a neural networks algorithm on the basis of key information extracted from the companies' financial statements: total receivables due from shareholders, total tangible assets, total current assets, total shareholders' funds, total provisions for risks and charges, total payables, total value of production, total production costs, and total financial charges.…”

“…Then, Model B expands the initial model by adding some internal and external characteristics, which could raise asymmetric information and companies' difficultness on the capital market. On the one hand, coherent with the approach proposed by D'Amato (2020) [5], we adopt a standard set of firm-specific variables that are widely used in the literature on SMEs' dynamics and financial constraints:…”

“…Error term (1) 1 Seniority (2) 0.000 1 Liquidity index (3) 0.001 0.075 1 Assets structure (4) −0.004 −0.357 −0.039 1 Total sales (5) −0.011 0.401 0.044 −0.294 1 D (6) 0.013 −0.138 −0.207 0.191 −0.296 1 CCC (7) 0…”

“…Drawing on Fazzari et al (1988) [1], the recent literature has focused on the difficulties of gathering financial resources in the capital market, paying particular attention to the identification of constrained companies and their main characteristics [2]. According to this evidence, firms' access to the financial markets and the successful collection of the funds needed is affected by market dynamics and imperfections [3,4] or exogenous shocks [5]. This condition might be negatively amplified by asymmetric information between parties and moral hazards [6][7][8], which are even more significant if we consider SMEs, since the probability of being under financial constraint depends on a firm's size [9][10][11].…”

THE GLOBAL FINANCIAL CRISIS AND CAPITAL STRUCTURE DECISIONS OF TURKISH SMEs: A REVIEW

“…With the rise of the financial crisis 2007-2009, firms shorten the structure and maturity of debt because of increased information asymmetry, risk and transaction costs. The empirical literature mentions that larger firms, as well as small firms, made critical changes on their capital structure and debt maturity (Alves & Francisco, 2015;Gonzalez, 2015;Zeitun et al, 2017;Mimouni et al, 2019;D'Amato 2019;Demirgüç-Kunt et al, 2020). Regarding the international sample, Alves & Francisco (2015) and Gonzalez (2015) show that firms shorten their maturity of debt for listed firms during the GFC owing to the decrease in supply of credit and demand for credit.…”