Article

Small Business Economics

, Volume 14, Issue 1, pp 55-63

An Empirical Approach to the Financial Behaviour of Small and Medium Sized Companies

  • Jose Lopez-GraciaAffiliated withDepartment of Accounting, Edificio Departamental Oriental, Facultad de Ciencias Económicas y Empresariales, Universidad de Valencia
  • , Cristina Aybar-AriasAffiliated withDepartment of Accounting, Edificio Departamental Oriental, Facultad de Ciencias Económicas y Empresariales, Universidad de Valencia

Rent the article at a discount

Rent now

* Final gross prices may vary according to local VAT.

Get Access

Abstract

This paper shows how the financial behaviour of small and medium sized companies is influenced by size and business sector. This idea underlies two research approaches to capital structure: (i) credit rationing, and (ii) the pecking order theory. Both approaches are based on asymmetric information and have been widely developed over the past two decades. An analysis has been carried out on 1000 Valencian companies that were randomly selected from the state company registry. These companies were divided by size before analysis. As an innovation, the investigation implements a multivariate MANOVA model that takes into account two key variables in the financing of small and medium firms. Our results show that size influences company self-financing strategies, and that business sector influences short-term financial policy.