IDEAS home Printed from https://ideas.repec.org/a/jfr/afr111/v7y2018i1p144.html
   My bibliography  Save this article

Investigating the Impact of Firm Characteristics on Capital Structure of Quoted and Unquoted SMEs

Author

Listed:
  • Mostafa S. ELbekpashy
  • Khairy ELgiziry

Abstract

This study aims to enhance the understanding of SMEs’ capital structure in Egypt. The study tests the impact of asset structure (tangibility), size, profitability, liquidity, growth, age, and ownership structure as independent variables on the leverage ratio. Three alternative variables are used as a proxy for leverage- total, long term, and short term leverage. The study further investigates the significance of the relationship between the economic sector as a control variable and the three leverage ratios. Multiple regression analysis is used to develop the explanatory models for two samples of SMEs. The first sample comprises of 28 listed and traded SMEs in Egypt. The second sample includes panel data of 95 non-quoted SMEs. The overall model recommends that all the independent and control variables significantly explain the capital structure decisions of SMEs in Egypt. The results of the analysis of the two samples show a high degree of similarity. The managerial ownership is found to be negatively correlated with short term leverage, while the block holding ownership is positively correlated with the total and the short term leverage. Moreover, the sector shows a significant relationship with the capital structure. The results of the study demonstrate that the financing behavior of SMEs in Egypt is consistent with the pecking order theory. Finally, the study introduces useful recommendations for policy makers and SMEs’ management in Egypt.

Suggested Citation

  • Mostafa S. ELbekpashy & Khairy ELgiziry, 2018. "Investigating the Impact of Firm Characteristics on Capital Structure of Quoted and Unquoted SMEs," Accounting and Finance Research, Sciedu Press, vol. 7(1), pages 144-144, February.
    • Handle: RePEc:jfr:afr111:v:7:y:2018:i:1:p:144
    as

    Download full text from publisher

    File URL: https://www.sciedupress.com/journal/index.php/afr/article/download/12657/8030
    Download Restriction: no
    File URL: https://www.sciedupress.com/journal/index.php/afr/article/view/12657
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. repec:bla:jfinan:v:43:y:1988:i:2:p:271-81 is not listed on IDEAS
    2. Graham C. Hall & Patrick J. Hutchinson & Nicos Michaelas, 2004. "Determinants of the Capital Structures of European SMEs," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 31(5‐6), pages 711-728, June.
    3. Scott Holmes & Pam Kent, 1991. "An Empirical Analysis of the Financial Structure of Small and Large Australian Manufacturing Enterprises," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 1(2), pages 141-154, Winter.
    4. Berger, Allen N. & Saunders, Anthony & Scalise, Joseph M. & Udell, Gregory F., 1998. "The effects of bank mergers and acquisitions on small business lending," Journal of Financial Economics, Elsevier, vol. 50(2), pages 187-229, November.
    5. Graham C. Hall & Patrick J. Hutchinson & Nicos Michaelas, 2004. "Determinants of the Capital Structures of European SMEs," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 31(5-6), pages 711-728.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nikolaos Daskalakis & Eleni Tsota, 2023. "Reintroducing Industry Effects in Capital Structure Determination of SMEs," Business & Entrepreneurship Journal, SCIENPRESS Ltd, vol. 12(2), pages 1-4.
    2. Joaquim J.S. Ramalho & Jacinto Vidigal da Silva, 2009. "A two-part fractional regression model for the financial leverage decisions of micro, small, medium and large firms," Quantitative Finance, Taylor & Francis Journals, vol. 9(5), pages 621-636.
    3. Dufour, Dominique & Luu, Philippe & Teller, Pierre, 2018. "The influence of cash flow on the speed of adjustment to the optimal capital structure," Research in International Business and Finance, Elsevier, vol. 45(C), pages 62-71.
    4. Mateev, Miroslav & Poutziouris, Panikkos & Ivanov, Konstantin, 2013. "On the determinants of SME capital structure in Central and Eastern Europe: A dynamic panel analysis," Research in International Business and Finance, Elsevier, vol. 27(1), pages 28-51.
    5. Ciarán mac an Bhaird & Brian Lucey, 2010. "Determinants of capital structure in Irish SMEs," Small Business Economics, Springer, vol. 35(3), pages 357-375, October.
    6. Myint Moe Chit & Marian Rizov, 2024. "SMEs' diversification of financing sources: Strategy or desperation?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(3), pages 3123-3146, July.
    7. Geert Campenhout & Tom Caneghem, 2013. "How did the notional interest deduction affect Belgian SMEs’ capital structure?," Small Business Economics, Springer, vol. 40(2), pages 351-373, February.
    8. Matias, Fernanda & Serrasqueiro, Zélia, 2017. "Are there reliable determinant factors of capital structure decisions? Empirical study of SMEs in different regions of Portugal," Research in International Business and Finance, Elsevier, vol. 40(C), pages 19-33.
    9. Diana Hechavarría & Charles Matthews & Paul Reynolds, 2016. "Does start-up financing influence start-up speed? Evidence from the panel study of entrepreneurial dynamics," Small Business Economics, Springer, vol. 46(1), pages 137-167, January.
    10. Ebenezer Bugri Anarfo, 2015. "Determinants of Capital Structure of Banks: Evidence from Sub-Sahara Africa," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(4), pages 624-640, April.
    11. Christoph Börner & Dietmar Grichnik & Frank Reize, 2010. "Finanzierungsentscheidungen mittelständischer Unternehmer — Einflussfaktoren der Fremdfinanzierung deutscher KMU," Schmalenbach Journal of Business Research, Springer, vol. 62(2), pages 227-275, March.
    12. Maté, María Luz. & Hernández, Ginés. & Sánchez, Javier. & Mínguez, Antonio., 2013. "¿Hay efectos de interacción regional en el comportamiento financiero de las PyME?," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(320), pages 841-867, octubre-d.
    13. Lindner, Thomas & Muellner, Jakob & Puck, Jonas, 2016. "Cost of Capital in an International Context: Institutional Distance, Quality, and Dynamics," Journal of International Management, Elsevier, vol. 22(3), pages 234-248.
    14. Thi Thu Tra Pham & Thai Vu Hong Nguyen & Son Kien Nguyen & Hieu Thi Hoang Nguyen, 2023. "Does planned innovation promote financial access? Evidence from Vietnamese SMEs," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(2), pages 281-307, June.
    15. Barbara Grabinska & Dorota Kedzior & Marcin Kedzior & Konrad Grabinski, 2021. "The Impact of CSR on the Capital Structure of High-Tech Companies in Poland," Sustainability, MDPI, vol. 13(10), pages 1-20, May.
    16. Zélia Serrasqueiro & Ana Caetano, 2015. "Trade-Off Theory versus Pecking Order Theory: capital structure decisions in a peripheral region of Portugal," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 16(2), pages 445-466, April.
    17. Pinto, João M. & Silva, Cátia S., 2021. "Does export intensity affect corporate leverage? Evidence from Portuguese SMEs," Finance Research Letters, Elsevier, vol. 38(C).
    18. Luis Javier Garcia-Martinez & Sascha Kraus & Matthias Breier & Andreas Kallmuenzer, 2023. "Untangling the relationship between small and medium-sized enterprises and growth: a review of extant literature," International Entrepreneurship and Management Journal, Springer, vol. 19(2), pages 455-479, June.
    19. Apostolos Dasilas & Nicolas Papasyriopoulos, 2015. "Corporate governance, credit ratings and the capital structure of Greek SME and large listed firms," Small Business Economics, Springer, vol. 45(1), pages 215-244, June.
    20. Mustafa Caglayan & Abdul Rashid, 2010. "The response of firms' leverage to uncertainty: Evidence from UK public versus non-public firms," Working Papers 2010019, The University of Sheffield, Department of Economics, revised Oct 2010.

    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jfr:afr111:v:7:y:2018:i:1:p:144. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sciedu Press (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.