The purpose of the research is to identify the determinants impacting on the company’s financial structure in small and medium companies belonging to different economic sectors. Our framework is represented by Giacosa (2015) and Broccardo et al. (2016), in which some variables impacting on the company’s financial structure have been identified. While identifying the sample, Italian economic context and a timeframe of 2012 2014 have been taken into consideration. In particular, our sample is composed of 12,175 Italian companies belonging to different economic sectors. First, mature companies tend to recourse to medium/long term debts due to multiple factors, such as the troubles with access to medium/long term bank debt and the need to gain market shares. On the contrary, new companies may have difficulties to recourse to medium and long term debts and for this reason they tend to recourse to short term debt. Second, generally companies with greater growth rates in terms of both, production value and invested capital imply a reduction of debt burden on invested capital. Third, high turnover implies an increase of total indebtedness. In particular, increase of turnover leads to increase of short term debt and decrease of medium/long term debt. Finally, the burden of intangible assets on total assets is positively correlated with indebtedness, what means that the companies who take advantage of greater opportunities of growth more often recourse to debt. The present research is characterized by interesting theoretical and practical implications, in terms of wider range of decisions concerning certain company’s variables about the level of the company’s debt, both for management and ownership. Some limitations characterize our research in terms of the sample and the methodology.
Why small and medium-sized firms tend to make recourse to external debt: An investigation into an Italian sample
GIACOSA, Elisa;MANZI, Luca Maria
2017-01-01
Abstract
The purpose of the research is to identify the determinants impacting on the company’s financial structure in small and medium companies belonging to different economic sectors. Our framework is represented by Giacosa (2015) and Broccardo et al. (2016), in which some variables impacting on the company’s financial structure have been identified. While identifying the sample, Italian economic context and a timeframe of 2012 2014 have been taken into consideration. In particular, our sample is composed of 12,175 Italian companies belonging to different economic sectors. First, mature companies tend to recourse to medium/long term debts due to multiple factors, such as the troubles with access to medium/long term bank debt and the need to gain market shares. On the contrary, new companies may have difficulties to recourse to medium and long term debts and for this reason they tend to recourse to short term debt. Second, generally companies with greater growth rates in terms of both, production value and invested capital imply a reduction of debt burden on invested capital. Third, high turnover implies an increase of total indebtedness. In particular, increase of turnover leads to increase of short term debt and decrease of medium/long term debt. Finally, the burden of intangible assets on total assets is positively correlated with indebtedness, what means that the companies who take advantage of greater opportunities of growth more often recourse to debt. The present research is characterized by interesting theoretical and practical implications, in terms of wider range of decisions concerning certain company’s variables about the level of the company’s debt, both for management and ownership. Some limitations characterize our research in terms of the sample and the methodology.File | Dimensione | Formato | |
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AFRICAN GIACOSA MAZZOLENI MANZI (3).pdf
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Manzi_AfrJourBusMan17.pdf
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