Efficiency and Capital Structure in Portuguese SMEs

  • António Fernandes
  • Clara Bento Vaz
  • Ana Paula Monte
Conference paper
Part of the Springer Proceedings in Mathematics & Statistics book series (PROMS, volume 223)


This paper aims to analyse the bi-directional relationship between technical efficiency, as a measure of companies’ performance, and capital structure, under the agency cost theory as well as the pecking order and trade-off theory, to explain the capital structure decisions. The technical efficiency was estimated by the DEA method and corrected by using a suitable bootstrap to obtain statistical inferences. To test the agency cost hypothesis, asymmetric information hypothesis, risk-efficiency hypothesis and franchise value hypothesis (under pecking order and trade off theories framework), two models were applied using some determinants of capital structure such as size, profitability, tangibility, liquidity as control and explanatory variables through a truncated regression with bootstrapping. From an initial sample of 1024 small and medium sized companies from the interior of Portugal, for the period 2006–2009, a subsample of 210 SMEs from secondary and tertiary sectors was selected. The results suggest that medium sized companies have higher average bias-corrected efficiency than small companies; that short-term leverage is positively related to efficiency and that the companies in the sample follow pecking order theory.


Data envelopment analysis Technical efficiency Capital structure SME Inland of Portugal 


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Copyright information

© Springer International Publishing AG 2018

Authors and Affiliations

  • António Fernandes
    • 1
  • Clara Bento Vaz
    • 2
  • Ana Paula Monte
    • 3
  1. 1.Applied Management Research Unit (UNIAG)Polytechnic Institute of BragançaBragançaPortugal
  2. 2.Centre for Management and Industrial Engineering (CEGI/INESC TEC)Polytechnic Institute of BragançaBragançaPortugal
  3. 3.Applied Management Research Unit (UNIAG) and NECEPolytechnic Institute of BragançaBragançaPortugal

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