Small Business Economics

, Volume 35, Issue 3, pp 357–375 | Cite as

Determinants of capital structure in Irish SMEs



This paper presents an empirical examination of determinants of the capital structure of a sample of 299 Irish small and medium-sized enterprises (SMEs). Results suggest that age, size, level of intangible activity, ownership structure and the provision of collateral are important determinants of the capital structure in SMEs. A generalisation of Zellner’s (Journal of the American Statistical Association57, 348–368, 1962) seemingly unrelated regression (SUR) approach is used to examine industry effects and to test the stability of parameter estimates across sectors. We find that the influence of age, size, ownership structure and provision of collateral is similar across industry sectors, indicating the universal effect of information asymmetries. Firms overcome the lack of adequate collateralisable firm assets in two ways: by providing personal assets as collateral for business debt, and by employing additional external equity to finance research and development projects.


Capital structure SME Zellner’s SUR model 

JEL Classifications

E44 G21 G32 L26 


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Copyright information

© Springer Science+Business Media, LLC. 2008

Authors and Affiliations

  1. 1.FiontarDublin City UniversityDublinIreland
  2. 2.School of BusinessTrinity College DublinDublinIreland

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