Hostname: page-component-848d4c4894-jbqgn Total loading time: 0 Render date: 2024-06-24T04:38:50.191Z Has data issue: false hasContentIssue false
  • English
  • Français

Are financing decisions of family-owned SMEs different? Empirical evidence using panel data

Published online by Cambridge University Press:  02 February 2015

Zélia Serrasqueiro ,
Paulo Maçãs Nunes  and
Jacinto Vidigal da Silva
Zélia Serrasqueiro
Affiliation:
Department of Management and Economics, Beira Interior University, Covilhã, Portugal Centre for Advanced Studies in Management and Economics of the Universidade de Évora (CEFAGE-UE), Covilhã, Portugal
Paulo Maçãs Nunes
Affiliation:
Department of Management and Economics, Beira Interior University, Covilhã, Portugal Centre for Advanced Studies in Management and Economics of the Universidade de Évora (CEFAGE-UE), Covilhã, Portugal
Jacinto Vidigal da Silva
Affiliation:
Centre for Advanced Studies in Management and Economics of the Universidade de Évora (CEFAGE-UE), Covilhã, Portugal Department of Management, Évora University, Évora, Portugal
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper analyses if ownership structure is an important determinant of capital structure decisions, on the basis of two sub-samples of family-owned and non-family owned SMEs, and using panel data models. The results suggest that family ownership is an important determinant for: i) the variations of short and long-term debt stimulated by financial deficit; ii) the speed of adjustment of short and long-term debt towards the respective target levels; and iii) the relationships between determinants and short-term debt and long-term debt. In general, the capital structure decisions of family-owned SMEs are closer to what is forecast by trade-off theory than those of non-family owned SMEs, whereas the capital structure decisions of non-family owned SMEs are closer to the forecasts of pecking order theory than those of family-owned SMEs.

Keywords

family-owned SMEslong-term debtnon-family owned SMEspanel data modelsshort-term debt
Type
Research Article
Information
Journal of Management & Organization , Volume 18 , Issue 3 , May 2012 , pp. 363 - 382
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2012

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Ang, J. (1976). The intertemporal behavior of corporate debt policy. Journal of Financial and Quantitative Analysis, 11, 555–566.Google Scholar
Aramburu, N., & Sáenz, J. (2011). Structural capital, innovation capability, and size effect: An empirical study. Journal of Management & Organization, 17(3), 307–325.Google Scholar
Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Review of Economic Studies, 58, 277–297.Google Scholar
Berger, A., & Udell, G. (1998). The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle. Journal of Banking and Finance, 22, 613–673.Google Scholar
Berger, A., & Udell, G. (2002). Small business credit availability and relationship lending: The importance of bank organizational structure. Economic Journal, 112, F32–F53.Google Scholar
Blanco-Mazagatos, V., Quevedo-Puente, E., & Castrillo, L. (2007). The trade-off between financial resources and agency costs in the family business. Family Business Review, 20, 199–213.Google Scholar
Blundell, M., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87, 115–143.Google Scholar
Bopaiah, C. (1998). Availability of credit to family businesses. Small Business Economics, 11, 75–86.Google Scholar
Brenes, E.Madrigal, K., & Molina, G. (2006). Family business structure and succession: Critical topics in Latin American experience. Journal of Business Review, 59, 372–374.Google Scholar
Chua, J., Chrisman, J., Kellermanns, F., & Wu, Z. (2011). Family involvement and new venture debt financing. Journal of Business Venturing, 26, 472–488.Google Scholar
Chua, J., Chrisman, J., & Sharma, P. (1999). Defining the family business by behavior. Entrepreneurship Theory & Practice, 23, 19–39.Google Scholar
Coetzer, A., Battisti, M., Jurado, T., & Massey, C. (2011). The reality of management development. Journal of Management & Organization, 17(3), 290–306.Google Scholar
Colot, O., & Croquet, M. (2006). L'Endettement des Moyennes entreprises familiales Est-Il different de Celui Des Moyennes entreprises non familiales? Le Cas de la Belgique. Revue Management & Avenir, 11, 167–185.Google Scholar
De Miguel, A., & Pindado, J. (2001). Determinants of capital structure: New evidence from Spanish panel data. Journal of Corporate Finance, 7, 77–99.Google Scholar
Demsetz, H., & Lehn, K. (1985). The structure of corporate ownership: Causes and consequences. Journal of Political Economy, 93, 1155–1177.Google Scholar
Diamond, D. (1989). Reputation acquisition in debt markets. Journal of Political Economy, 97, 828–862.Google Scholar
Donckels, R., & Lambrecht, J. (1999). The re-emergence of family-based enterprises in East Central Europe: What can be learned from family business research in the Western World? Family Business Review, 12, 171–188.Google Scholar
Dyer, W., & Whetten, D. (2006). Family firms and social responsibility: Preliminary evidence from the S&P 500. Entrepreneurship Theory & Practice, 30, 785–802.Google Scholar
Fagiolo, G., & Luzzi, A. (2006). Do liquidity constraints matter in explaining firm size and growth? Some evidence from the Italian manufacturing industry. Industrial and Corporate Change, 15, 1–39.Google Scholar
Fama, E., & French, K. (2002). Testing trade-off and pecking order predictions about dividends and debt. The Review of Financial Studies, 15, 1–33.Google Scholar
Faulkender, M., & Petersen, M. (2006). Does the source of capital affect capital structure? Review of Financial Studies, 19, 45–79.Google Scholar
Filbeck, G., & Lee, S. (2000). Financial management techniques in family businesses. Family Business Review, 13, 201–216.Google Scholar
Flannery, M. (1986). Asymmetric information and risky debt maturity choice. The Journal of Finance, 41, 19–37.Google Scholar
Gaud, P., Jani, E., Hoesli, M., & Bender, A. (2005). The capital structure of Swiss firms: An empirical analysis using dynamic panel data. European Financial Management, 11, 51–69.Google Scholar
Graham, J. (1996). Debt and the marginal tax rate. Journal of Financial Economics, 41, 41–74.Google Scholar
Graham, J., & Harvey, C. (2001). The theory and practice of corporate finance: Evidence from the field. Journal of Financial Economics, 60, 187–243.Google Scholar
Graham, J., Lemmon, M., & Schallheim, J. (1998). Debt, leases, taxes and the endogeneity of corporate tax status. The Journal of Finance, 53, 131–162.Google Scholar
Guzzo, R., & Abbott. S. (1990). Family firms as utopian organizations. Family Business Review, 3, 23–33.Google Scholar
Haynes, D., Avery, R., & Hunts, H. (1999). The decision to outsource child care in households engaged in a family business. Family Business Review, 12, 269–281.Google Scholar
Hernández-Cánovas, G., & Koëter-Kant, J. (2010). The institutional environment and the number of bank relationships: An empirical analysis of European SMEs. Small Business Economics, 34, 375–390.Google Scholar
Hernández-Cánovas, G., & Martínez-Solano, P. (2007). Effect of the number of banking relationships on credit availability: Evidence from panel data of Spanish small firms. Small Business Economics, 28, 37–53.Google Scholar
Hernández-Cánovas, G., & Martínez-Solano, P. (2010). Relationship lending and SME financing in the continental European Bank-based system. Small Business Economics, 34, 465–482.Google Scholar
Heyman, D., Deloof, M., & Ooghe, H. (2008). The financial structure of private held Belgian firms. Small Business Economics, 30, 301–313.Google Scholar
Holmes, S., & Kent, P. (1991). An empirical analysis of the financial structure of small and large Australian manufacturing enterprises. Journal of Small Business Finance, 2, 141–154.Google Scholar
Hovakimian, A., Opler, T., & Titman, S. (2001). The debt-equity choice. Journal of Financial and Quantitative Analysis, 36, 1–24.Google Scholar
Huang, C.-J. (2010). Corporate governance, corporate social responsibility and corporate performance. Journal of Management & Organization, 16(5), 641–655.Google Scholar
Huybrechts, J., Voordeckers, W., Vandemaele, S., & Lybaert, N. (2011). The distinctiveness of family-firm intangibles: A review and suggestions for future research. Journal of Management & Organization, 17(2), 268–287.Google Scholar
Jalilvand, A., & Harris, R. (1984). Corporate behaviour in adjusting to capital structure and dividend targets: An econometric study. The Journal of Finance, 39, 127–145.Google Scholar
James, H. (1999). Owner as manager, extended horizons and the family firms. International Journal of the Economics of Business, 6, 41–55.Google Scholar
Kota, H., & Tomar, S. (2010). Corporate governance practices in Indian firms. Journal of Management & Organization, 16(3), 266–279.Google Scholar
Langlais, E. (1999). Les Effets D'antisélection Lorsque le Principal et les Agents ont Descroyances Différentes. Révue D'Économie Politique, 109, 513–533.Google Scholar
Lev, B., & Pekelman, D. (1975). A multiperiod adjustment model for the firm's capital structure. The Journal of Finance, 30, 75–92.Google Scholar
Littunen, H., & Hyrsky, K. (2000). The early entrepreneurial stage in Finnish family and nonfamily firms. Family Business Review, 13, 41–54.Google Scholar
López-Gracia, J., & Sánchez-Andújar, S. (2007). Financial structure of the family business: Evidence from a group of small Spanish firms. Family Business Review, 20, 269–287.Google Scholar
López-Gracia, J., & Sogorb-Mira, F. (2008). Testing trade – Off and pecking order theories in Spanish SMEs. Small Business Economics, 31, 117–136.Google Scholar
McConaughy, D., & Phillips, G. (1999). Founders versus descendants: The profitability, efficiency, growth characteristics and financing in large, public, founding family-controlled firms, Family Business Review, 12, 123–132.Google Scholar
Menéndez-Requejo, S. (2006). Ownership structure and firm performance: Evidence from Spanish family firms. In Poutziouris, P., Smyrnios, K., & Klein, S. (Eds.), Handbook of research on family business. Cheltenham, England: Edward Elgar.Google Scholar
Michaelas, N., Chittenden, F., & Poutziouris, P. (1999). Financial policy and capital structure choice in U.K. SMEs: Empirical evidence from panel data. Small Business Economics, 12, 113–130.Google Scholar
Modigliani, F., & Miller, M. (1958). The cost of capital, corporation finance and theory of investment. The American Economic Review, 48, 261–297.Google Scholar
Mulkay, B., & Sassenou, M. (1995). La Hiérarchie des Financements des Investissements des PME. Review Économique, 48, 345–363.Google Scholar
Myers, S. (1977). The determinants of corporate borrowing. Journal of Financial Economics, 5, 147–176.Google Scholar
Myers, S. (1984). The capital structure puzzle. The Journal of Finance, 57, 575–592.Google Scholar
Myers, S., & Majluf, N. (1984). Corporate financing and investment decision when firms have information that investors do not have. Journal of Financial Economics, 13, 187–221.Google Scholar
Ozkan, A. (2001). Determinants of capital structure and adjustment to long run target: Evidence from UK firm panel data. Journal of Business Finance & Accounting, 28, 175–198.Google Scholar
Peters, B., & Westerheide, P. (2009). Short-term borrowing for long-term projects: Are family business more susceptible to ‘Irrational’ financing choices? Retrieved from http://ssrn.com/abstract=1342314Google Scholar
Petersen, M., & Rajan, R. (1994). The benefits of lending relationships: Evidence from small business data. The Journal of Finance, 49, 3–37.Google Scholar
Pettit, R., & Singer, R. (1985). Small business finance: A research agenda. Financial Management, 14, 47–60.Google Scholar
Pittman, J., & Klassen, K. (2001). The influence of firm maturation on firms' rate of adjustment to their optimal capital structures. The Journal of the American Taxation Association, 23, 70–94.Google Scholar
Poutziouris, P. (2001). The views of family firms on venture capital: Empirical evidence from the UK small to medium-size enterprising economy. Family Business Review, 14, 277–291.Google Scholar
Quintart, A., & Zisswiller, R. (1994). Teoria financeira. Lisboa, Portugal: Editorial Caminho, SA.Google Scholar
Rajan, R., & Zingales, L. (1995). What do we know about capital structure? Some evidence from international data. The Journal of Finance, 50, 1421–1460.Google Scholar
Rodríguez-Rodríguez, M. (2006). Trade credit in small and medium size firms: An application of the system estimator with panel data. Small Business Economics, 27, 103–126.Google Scholar
Romano, C., Tanewski, G., & Smyrnios, K. (2001). Capital structure decision making: A model for family business. Journal of Business Venturing, 16, 285–310.Google Scholar
Shyam-Sunder, L., & Myers, S. (1999). Testing static trade-off against pecking order models of capital structure. Journal of Financial Economics, 51, 219–244.Google Scholar
Sogorb-Mira, F. (2005). How SME uniqueness affects capital structure: Evidence from a 1994-1998 Spanish data panel. Small Business Economics, 25, 447–457.Google Scholar
Stiglitz, J., & Weiss, A. (1981). Credit rationing in market with imperfect information. The American Economic Review, 71, 393–410.Google Scholar
Taggart, R. (1977). A model of corporate financing decisions. The Journal of Finance, 32, 1467–1484.Google Scholar
Tagiuri, R., & Davis, J. (1992). On the goals of successful family businesses. Family Business Review, 5, 43–62.Google Scholar
Talberg, M., Winge, C., Frydenberg, S., & Westgaard, S. (2008). Capital structure across industries. International Journal of Economics of Business, 15, 181–200.Google Scholar
Thomas, J. (2009). Attitudes and expectations of shareholders: The case of the multigeneration family business. Journal of Management & Organization, 15, 346–362.Google Scholar
Titman, S., & Wessels, R. (1988). The determinants of capital structure choice. The Journal of Finance, 43, 1–19.Google Scholar