The specificity of the small businesses` capital structure from the standpoint of empirical approach

Author(s):  M.V. Podshivalova, candidate of Sciences, associate Professor, South Ural State University, National Research, Chelyabinsk, Russia, pods-mariya@yandex.ru

I.S. Plekhanova, South Ural State University, National Research, Chelyabinsk, Russia

Issue:  Volume 45, №1

Rubric:  Public and business finance

Annotation:  The empirical testings' review of capital structure's modern theories in Russia and abroad are presented. It’s shown that most of them do not provide a real description of the financial leverage's mechanism on the enterprises of small scale The specificity of small business' financing in Russia are provided. There are survey data and statistical studies of the SME sector over the last 10 years. It's revealed that The domestic small firms' decisions about the cash sources characterized fear of publicity, hope "our own strength", focus on the informal capital market and replacement company's deficit by the owners' consumer credit. The contemporary theories' adequacy are assessed based on the identified specifics of small firms' capital structure. It's proposed the main limitations of classical theories – Trade-off Theory, Pecking Order Theory, Agency Cost Theory, and behavioural – Informational Cascades Theory, Market Timing Theory and influence manager’s personal qualities on the firm's financial leverage

Keywords:  capital structure; small business; financing small business; financial leverage; behavioral theory

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