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Small Business Economics

Erschienen in:

01.09.2012

Quantity and quality of information and SME financial structure

verfasst von: Tom Van Caneghem, Geert Van Campenhout

Erschienen in: Small Business Economics | Ausgabe 2/2012

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Abstract

We test whether the amount and/or quality of financial statement information affects the financial structure of small and medium-sized enterprises (SMEs). Belgian SMEs are used, because there are important differences in disclosure and audit requirements among them. Consistent with the traditional view that asymmetric or incomplete information restricts access to external funds, our results indicate that both the amount and quality of financial statement information are positively related to SME leverage. In addition, we find that leverage is positively related to asset structure, growth (prospects) and median industry leverage, and negatively related to firm age and profitability.

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Note that a negative relationship is also consistent with firms signalling future results by using more or less debt (Ross 1977).

As a sensitivity check, we also considered truncation at 1% and 99%. In addition, we considered an alternative cutoff. More specifically, we also winsorized and truncated observations that were more than two standard deviations away from the mean value. Results were insensitive to these robustness checks.

As a robustness check, we considered alternative proxies for firm size, asset structure and industry. Firstly, we also considered the natural logarithm of the number of employees as a measure of firm size. Secondly, asset structure was also measured as the ratio of net fixed assets to total assets [inspired by the belief that fixed assets are more secure than current assets (see e.g. Van der Wijst and Thurik 1993)]. Finally, we also employed industry dummies to capture the industry effect. Results were robust to these alternative specifications.

Moreover, variance inflation factors (VIFs) are not indicative of multicollinearity problems related to the inclusion of firm size in our model.

Results for estimating Eq. 2 are presented in Appendix.

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Titel: Quantity and quality of information and SME financial structure
verfasst von: Tom Van Caneghem
Geert Van Campenhout
Publikationsdatum: 01.09.2012
Verlag: Springer US
Erschienen in: Small Business Economics / Ausgabe 2/2012
Print ISSN: 0921-898X
Elektronische ISSN: 1573-0913
DOI: https://doi.org/10.1007/s11187-010-9306-3

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