Smes’ Investment Determinants: Empirical Evidence Using Quantile Approach

Abstract

This paper makes an important contribution to the literature on SMEs, namely investigating whether the relationships between determinants and investment are dependent on the level of investment. Based on a sample of Portuguese SMEs, using two-step estimation method, firstly using probit regression and secondly using quantile regressions, we find significant non-linearities in relationships formed between determinants and investment over the distribution of investment. In particular, we find that: 1) sales, age and growth opportunities are restrictive determinants of investment for low levels of investment, but positive determinants of investment for high levels of investment; 2) debt and the interest rate are restrictive determinants of investment but only for low and intermediate levels of investment; 3) cash flow is a positive determinant of investment, but is more important for investment regarding low levels of investment; 4) GNP is a positive determinant of investment, but only for high levels of investment; and 5) investment in the previous period is a positive determinant of investment in the present period, but only for intermediate and high levels of investment. The relevance of the various theories explaining firm investment depends on SMEs’ level of investment.

Moderating effect of institutional environment on economic policy uncertainty: evidence from firms’ investments

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Corporate performance volatility: a micro-level perspective

“…In the theory of the firm, the extent of variability among performance indicators of interest, and the persistence of the condition over time, often impacts shareholder and investor confidence, a condition which may ultimately define the magnitude of investments, firms or corporate entities attract, all things being equal. (refer to Nunes et al, 2012;Utama and Sulistika, 2015;Peri c and Ðurkin, 2015;Grazzi et al, 2016). The reviewed literature suggests that empirical inquiries focusing on corporate or firm performance over the years have employed varying indicators as proxies in measuring and defining such an indicator.…”

Firm Growth Types and Key Macroeconomic Aggregates Through the Economic Cycle

“…As shown by the surveys of Henrekson and Johansson (2010) and Daunfeldt et al (2014) all surveyed studies use employment and sales as growth indicators. Sales growth is the most common indicator used by managers and entrepreneurs (Coad, Hölzl 2012) and it is also often used in empirical studies on firm growth (De Jorge Moreno, Laborda Castillo 2011;Maçãs Nunes et al 2012). Wages, productivity, revenue and value added are also used as growth variables (for example, Moreno, Casillas 2007;Hölzl 2009;López-Garcia, Puente 2012;Bjuggren et al 2013;Hölzl, Frisenbichler 2010;Bravo-Biosca et al 2013;Du, Temouri 2015).…”