The capital structure dynamics of European listed SMEs

Kenourgios, Dimitris; Savvakis, Georgios; Papageorgiou, Theofanis

doi:10.1080/08276331.2019.1603946

Cited by 27 publications

(38 citation statements)

References 34 publications

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“…Prior research provides evidence that companies' financial decisions are determined by a number of economic and institutional factors, which can be divided into three groups (Michaelas et al, 1999;Hall et al, 2000Hall et al, , 2004Psillaki and Dasaklakis, 2009;Frydenberg, 2011;Jõeveer, 2013;Kenourgios et al, 2019): (1) firm-specific factors, (2) industry-specific factors and (3) determinants on country level (institutional and macroeconomic features of national economies). Michaelas et al (1999) and Hall et al (2000) conducted research on the same panel of 3,500 SMEs from the UK operating between 1988 and 1995.…”

Section: Theoretical and Empirical Backgroundmentioning

confidence: 99%

“…The study did not deny the existence of industrial and country-specific factors, but the strength of their impact in comparison with the firm-specific factors was assessed by Psillaki and Dasaklakis (2009) as low. The study of Kenourgios et al (2019) included financial data of 1,120 listed SMEs from EU countries and the period 2005-2015. Authors find that the effect of firm-specific capital structure determinants does not differ significantly across size and country groups.…”

Section: Theoretical and Empirical Backgroundmentioning

confidence: 99%

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Capital structure determinants of small and medium-sized enterprises: evidence from Central and Eastern Europe

Czerwonka

Jaworski

2021

JSBED

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PurposeThe main aim of the paper is to examine the small and medium-sized enterprises’ (SMEs) capital structure determinants in Central and Eastern Europe (CEE) (Poland, Czechia, Slovakia, Hungary, Bulgaria and Romania).Design/methodology/approachThe authors used panel models to analyze financial data of 15,253 companies operating in the years 2014–2017.FindingsThe authors confirmed the dominant role of firm-specific factors. Industry and country variables explain only 4% of debt variability of the surveyed companies. The direction of influence of the diagnosed firm-specific factors is consistent with the pecking order theory. About one-fourth of SMEs in CEE hold a stock of debt capacity. It negatively affects the share of debt in the capital. The authors did not confirm the influence of the systematic industry business risk.Research limitations/implicationsThe limitations of the study are (1) the inclusion of only six CEE countries in the sample; (2) the exclusion of microenterprises from the sample; (3) the capital structure relationships are observed following the applications of static panel; (4) the endogeneity issue has not been addressed in the model.Practical implicationsThis study shows that business-friendly institutional environment is an important factor influencing the indebtedness of companies. It increases the leverage and, consequently, the return on equity, especially in CEE countries.Originality/valueSME analyses in CEE countries are not as frequent as for other regions. Despite the classical determinants of the SMEs' capital structure, the authors have included debt capacity and systematic industry business risk in this study.

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Section: Theoretical and Empirical Backgroundmentioning

confidence: 99%

Section: Theoretical and Empirical Backgroundmentioning

confidence: 99%

Capital structure determinants of small and medium-sized enterprises: evidence from Central and Eastern Europe

Czerwonka

Jaworski

2021

JSBED

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“…The European sovereign debt crisis (ESDC) had an important negative effect on the economic growth, while firms in stressed countries became more likely to be denied credit and to face higher loan rates. In such conditions, SMEs began relying considerably more on trade creditors or government subsidies and as a result, the ESDC had a negative impact on firms' leverage on the periphery economies and a positive effect on the core European countries (Kenourgios et al, 2019).…”

Section: Literature Reviewmentioning

confidence: 99%

“…However, the differences in the determinants of SMEs' capital structure among countries and across macroeconomic states are gaining considerable attention (e.g., Daskalakis, Balios, & Dalla, 2017; Hall, Hutchinson, & Michaelas, 2004; Psillaki & Daskalakis, 2009). Determinants such as profitability, asset structure, size, growth, opportunities taxation, earnings' volatility, non‐debt tax shield, liquidity, and risk are found to be statistically significant, although the signs of the coefficients vary across countries and SMEs' size (Dakua, 2018; Kenourgios, Savvakis, & Papageorgiou, 2019).…”

Section: Introductionmentioning

confidence: 99%

To EMU or not to EMU: Can TFP “provoke” the capital structure puzzle of SMEs?

2020

Self Cite

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This article investigates the influence of the macroeconomic environment on corporate leverage. Using panel data of European listed SMEs, we examine the relationship between capital structure and country‐level total factor productivity (TFP), GDP growth, interest rates and stock market development across firm categories (micro, small, and medium) and monetary regimes (EMU and non‐EMU countries) for the period 2005–2015. By performing a dynamic panel data analysis into a vector error correction framework, along with several model specifications and robustness tests, we provide new evidence that country‐level TFP is an important determinant of capital structure choice, while its impact depends on the institutional environment (inside the EMU or not). Although there are both short‐run and long‐run dynamic relationships between the corporate leverage and the macroeconomic factors, to EMU or not to EMU is also evident when looking at the three size categories. Overall, our results suggest that all SMEs are not the same, and the determinants of their capital structure vary across size categories.

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“…Another situation can occur in which managers implement risky investment projects, generating additional risk for lenders, while only owners benefit from higher profits. Debt can then act as a factor that disciplines the management, enforcing more active operating policies, and more effective investment policies (Kenourgios et al 2019). In this situation, debt decreases agency costs (Novaes and Zingales 1995).…”

Section: Theories Of Capital Structurementioning

confidence: 99%

Capital Structure Choices in Technology Firms: Empirical Results from Polish Listed Companies

Kędzior

Grabińska

Grabiński

et al. 2020

JRFM

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The main aim of the paper is the identification of capital structure determinants, with a special emphasis on investments in the innovativeness of Polish New Technology-Based Firms (NTBFs). Poland is a unique country in that it is an emerging market that was also promoted in 2018 to the status of a developed country. The study sample consisted of 31 companies listed in the Warsaw Stock Exchange that are classified as high-tech firms and covers the period 2014–2018. The following factors influencing the capital structure were analyzed: internal and external innovativeness and the firm’s size, liquidity, intangibility, age, profitability, and growth opportunities. The results of the research provide empirical evidence that liquidity, age, and investments in innovativeness determine capital structure, which provides an additional argument supporting the trade-off theory and the modified version of the pecking order theory. More specifically, the results suggest that companies whose process of investment in innovativeness is based on the external acquisition of technology are able to attract external financing, while the process based on internally generated innovativeness (R&D activity) deters external capital. The results are interesting for policymakers in emerging markets.

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The capital structure dynamics of European listed SMEs

Cited by 27 publications

References 34 publications

Capital structure determinants of small and medium-sized enterprises: evidence from Central and Eastern Europe

Capital structure determinants of small and medium-sized enterprises: evidence from Central and Eastern Europe

To EMU or not to EMU: Can TFP “provoke” the capital structure puzzle of SMEs?

Capital Structure Choices in Technology Firms: Empirical Results from Polish Listed Companies

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