Small Business Finance: A Research Agenda

Pettit, R. Richardson; Singer, Ronald F.

doi:10.2307/3665059

Cited by 284 publications

(194 citation statements)

References 23 publications

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“…The result is contradict with Trade Off theory that suggest that a company chooses how much debt finance and how much equity finance by balancing the costs of financing and the tax benefits. Previous research with the similar finding (Pettit & Singer, 1985) claimed that SMEs are less likely to be profitable and therefore will not benefit from the tax advantage.…”

Section: Taxationmentioning

confidence: 55%

“…Normally, for debt financing the company needs to provide a guarantee in the form of collateral. In this case, the SMEs are always seen as having a higher risk because typically SMEs have less tangible assets and low profit (Pettit & Singer, 1985). In this regard it is expected that tangibility has positive relationship to the leverage and taxes have a negative relationship.…”

Section: Theory On Capital Structurementioning

confidence: 99%

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The Determinant of Capital Structure of SMEs in Malaysia: Evidence from Enterprise 50 (E50) SMEs

Saarani¹,

Shahadan²

2013

ASS

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Capital structure have implications in determining the ability and success of a firm, especially to small and medium-sized enterprises (SMEs). This paper analyses the capital structure of SMEs in Malaysia focusing on Enterprise 50 (E50) SMEs. E50 is an annual awards program initiated by government and organized by SME Corporation & Deloitte Malaysia since 1997 to recognize the 50 best SME companies in Malaysia based on their performances and potential to succeed. The secondary data from Companies Commission of Malaysia has been collected for the study. The study employed regression analysis on 334 companies, utilised the accounting data for the five year period of 2005 to 2009. Capital structure is the Dependent Variable referring to debt ratio of the companies, decomposed into Long Term Debt ratio and Short term Debt ratio. The Independent Variables (IV) are age; size; tangibility; liquidity; profitability; growth and taxation. Two theories of capital structure have guided this study i.e. the Trade-Off Theory and the Pecking Order Theory. The study found that size is important if we decomposed the debt into longand short term. In addition, asset tangibility, liquidity and profitability are the main capital structure determinants for SMEs. Age and growth are important for a long term, while taxation is not an important consideration in capital structure decision.

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Section: Taxationmentioning

confidence: 55%

Section: Theory On Capital Structurementioning

confidence: 99%

The Determinant of Capital Structure of SMEs in Malaysia: Evidence from Enterprise 50 (E50) SMEs

Saarani¹,

Shahadan²

2013

ASS

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“…Small companies are more likely to be faced with information asymmetry and financial constraints. Therefore, they face higher transaction costs in accessing external financing sources, which increases the possibility of facing low cash levels (Brennan & Hughes, 1991;Collins, Rozeff & Dhaliwal, 1981;Mikkelson & Partch, 2003;Pettit & Singer, 1985). The literature has suggested that the chances of bankruptcy are higher for small companies, as they tend to be less diversified (Rajan & Zingales, 1995;Titman & Wessels, 1988).…”

Section: Literature Reviewmentioning

confidence: 99%

Analysis of the determinants of corporate cash holdings: Examples from companies in Serbia

Račić¹,

Stanišić²

2017

Eur J Appl Econ

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Abstract:In this study, we aimed to analyse the empirical determinants of cash holdings on the sample of non-financial companies operating in the Republic of Serbia. For that purpose, dynamic panel data models were estimated by utilising the generalised method of moments for the period from 2008 to 2013. The econometric analysis indicates that companies with higher cash flow hold more cash in their assets. Larger companies as well as companies with more liquid assets and higher turnover coefficients tend to reduce their cash levels. According to the results, companies operating in the Republic of Serbia tend to hold the optimal level of cash and prefer internal sources of financing, which is in line with the principles of trade-off theory and pecking order theory.

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“…Empirical literature argues that the larger the firm is the more stable cash flow it holds and the more diversified it is (Gill et al, 2009) leading to a negative relationship between firm size and default probabilities (Pettit and Singer, 1985). A recent study by Gupta et al (2014) investigates the financial and non-financial factors that influence the failure within each of the SME categories (micro, small, and medium).…”

Section: 3micro Small and Medium-sized Enterprisesmentioning

confidence: 99%

The effect of size on the failure probabilities of SMEs: An empirical study on the US market using discrete hazard model

Kalak

Hudson

2016

International Review of Financial Analysis

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(2016) The effect of size on the failure probabilities of SMEs: An empirical study on the US market using discrete hazard model. AbstractThis paper investigates the extent to which the size affects the SMEs probabilities of bankruptcy.Using a dataset of (11,117) US non-financial firms, of which (465) filed for insolvency under chapters 7/11 between 1980 and 2013. We forecast the bankruptcy probabilities by developing four discretetime duration-dependant hazard models namely SMEs, Micro, Small, and Medium. A comparison of the default prediction models for medium firms and SMEs suggest that almost an identical set of explanatory variables affect the default probabilities leading us to believe that there is no material impact on the decision-making process by treating each of these groups separately. However, comparisons between the micro and small firms with the SMEs firms strongly suggest that they need to be considered separately while modelling credit risk for them.JEL classification:

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Small Business Finance: A Research Agenda

Cited by 284 publications

References 23 publications

The Determinant of Capital Structure of SMEs in Malaysia: Evidence from Enterprise 50 (E50) SMEs

The Determinant of Capital Structure of SMEs in Malaysia: Evidence from Enterprise 50 (E50) SMEs

Analysis of the determinants of corporate cash holdings: Examples from companies in Serbia

The effect of size on the failure probabilities of SMEs: An empirical study on the US market using discrete hazard model

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