Integrating uncertainty and governance into a capital structure puzzle: can risk-taking and rule-taking explain zero-leverage firms?

Araki, Michael; Martins, Henrique Castro

doi:10.1007/s11846-021-00500-w

Cited by 6 publications

(2 citation statements)

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“…The capital structure puzzle has been addressed from both financial (Barclay and Smith, 2020) and non-financial theories (Araki and Martins, 2021; Mogha and Williams, 2021) but still remains as a major challenge that has been poorly explained (Deangelo, 2022; Denis, 2012; Graham and Leary, 2011). Based on strategic and entrepreneurial theories and the context of DETEs, this study investigates another missing piece of the capital structure puzzle namely pressures from formal and informal institutions.…”

Section: Resultsmentioning

confidence: 99%

“…To test this idea, we use the Provincial Competitiveness Index (PCI) to measure the institutional quality at provincial level in Vietnam [6]. The ten cities and provinces in our sample receive a value of one in each year (2011, 2013 and 2015) if their PCI index is higher than that year's sample mean of PCI, and zero otherwise to measure the sub-national institutional variation.…”

Section: Robustness Checkmentioning

confidence: 99%

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Bank ties, institutional pressures, and capital structure of Vietnamese SMEs

Ngo

Nguyen

Roy

2022

IJEBR

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PurposeThis article studies the moderating effect of institutional pressures on the impact of bank ties on the capital structure of small and medium-size enterprises (SMEs).Design/methodology/approachThe study uses an unbalanced longitudinal dataset covering three years—2011, 2013 and 2015—from a project on small manufacturing enterprises in Vietnam. The sample consists of 7,680 firm-year observations.FindingsPressures from formal and informal institutions lessen the positive effect of bank ties on the capital structure of SMEs. These moderating effects are more salient in regions having lower institutional quality.Originality/valueEmpirically showing how institutional factors can be investigated together with relational factors to explain the capital structure of SMEs in a developing economy. Distinguishing between formal and informal institutional pressures and revealing their indirect effect on SMEs' capital structure through impacting the effect of bank ties.

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