Which Capital Structure Theory Explains Financial Behaviour of Small and Medium-Sized Enterprises? Evidence from Poland
Small and medium-sized enterprises (SME) play a special role in the modern economy. At the same time, the difficulty in accessing sources of financing is the main barrier limiting the development of this sector. Despite this, studies of the capital structure of SMEs are performed less frequently tha...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Collegium of Economic Analysis, SGH Warsaw School of Economics
2023-03-01
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| Series: | Gospodarka Narodowa. The Polish Journal of Economics |
| Subjects: | |
| Online Access: | https://gnpje.sgh.waw.pl/Which-Capital-Structure-Theory-nExplains-Financial-Behaviour-nof-Small-and-Medium,159035,0,2.html |
| _version_ | 1797854673521082368 |
|---|---|
| author | Jacek Jaworski Leszek Czerwonka |
| author_facet | Jacek Jaworski Leszek Czerwonka |
| author_sort | Jacek Jaworski |
| collection | DOAJ |
| description | Small and medium-sized enterprises (SME) play a special role in the modern economy.
At the same time, the difficulty in accessing sources of financing is the main
barrier limiting the development of this sector. Despite this, studies of the capital
structure of SMEs are performed less frequently than among large enterprises. The
aim of this paper is to examine which capital structure theory best explains the
financial decisions of SMEs in Poland. Additionally, an attempt is made to identify
the main firm-specific capital structure determinants. The research material
includes financial data from 2,820 SMEs in Poland operating in the 2011–2018
period. Static and dynamic panel models were applied to conduct the analysis.
The study found that most SMEs in Poland behave in accordance with the pecking
order theory. However, the results of testing the trade-off theory indicate that
there may be a group of companies seeking an optimal capital structure according
to the assumptions of this theory. The speed of adjustment is about 24%. The
study confirmed a positive relationship between SME indebtedness and firm size.
The same relationship was found for the growth rate. The opposite direction was
identified for tangibility and liquidity. |
| first_indexed | 2024-04-09T20:09:52Z |
| format | Article |
| id | doaj.art-7b801f404f37450d981aeee0378429bf |
| institution | Directory Open Access Journal |
| issn | 2300-5238 |
| language | English |
| last_indexed | 2024-04-09T20:09:52Z |
| publishDate | 2023-03-01 |
| publisher | Collegium of Economic Analysis, SGH Warsaw School of Economics |
| record_format | Article |
| series | Gospodarka Narodowa. The Polish Journal of Economics |
| spelling | doaj.art-7b801f404f37450d981aeee0378429bf2023-04-01T06:24:19ZengCollegium of Economic Analysis, SGH Warsaw School of EconomicsGospodarka Narodowa. The Polish Journal of Economics2300-52382023-03-013131829210.33119/GN/159035159035Which Capital Structure Theory Explains Financial Behaviour of Small and Medium-Sized Enterprises? Evidence from PolandJacek Jaworski0https://orcid.org/0000-0002-6629-3497Leszek Czerwonka1https://orcid.org/0000-0002-8438-6443Faculty of Business, WSB University in Gdańsk, PolandFaculty of Economics, University of Gdańsk, PolandSmall and medium-sized enterprises (SME) play a special role in the modern economy. At the same time, the difficulty in accessing sources of financing is the main barrier limiting the development of this sector. Despite this, studies of the capital structure of SMEs are performed less frequently than among large enterprises. The aim of this paper is to examine which capital structure theory best explains the financial decisions of SMEs in Poland. Additionally, an attempt is made to identify the main firm-specific capital structure determinants. The research material includes financial data from 2,820 SMEs in Poland operating in the 2011–2018 period. Static and dynamic panel models were applied to conduct the analysis. The study found that most SMEs in Poland behave in accordance with the pecking order theory. However, the results of testing the trade-off theory indicate that there may be a group of companies seeking an optimal capital structure according to the assumptions of this theory. The speed of adjustment is about 24%. The study confirmed a positive relationship between SME indebtedness and firm size. The same relationship was found for the growth rate. The opposite direction was identified for tangibility and liquidity.https://gnpje.sgh.waw.pl/Which-Capital-Structure-Theory-nExplains-Financial-Behaviour-nof-Small-and-Medium,159035,0,2.htmlcapital structuresmall and mediumsizedenterprisessme sectorpeckingorder theorytrade-off theory |
| spellingShingle | Jacek Jaworski Leszek Czerwonka Which Capital Structure Theory Explains Financial Behaviour of Small and Medium-Sized Enterprises? Evidence from Poland Gospodarka Narodowa. The Polish Journal of Economics capital structure small and mediumsized enterprises sme sector pecking order theory trade-off theory |
| title | Which Capital Structure Theory
Explains Financial Behaviour
of Small and Medium-Sized
Enterprises? Evidence from Poland |
| title_full | Which Capital Structure Theory
Explains Financial Behaviour
of Small and Medium-Sized
Enterprises? Evidence from Poland |
| title_fullStr | Which Capital Structure Theory
Explains Financial Behaviour
of Small and Medium-Sized
Enterprises? Evidence from Poland |
| title_full_unstemmed | Which Capital Structure Theory
Explains Financial Behaviour
of Small and Medium-Sized
Enterprises? Evidence from Poland |
| title_short | Which Capital Structure Theory
Explains Financial Behaviour
of Small and Medium-Sized
Enterprises? Evidence from Poland |
| title_sort | which capital structure theory explains financial behaviour of small and medium sized enterprises evidence from poland |
| topic | capital structure small and mediumsized enterprises sme sector pecking order theory trade-off theory |
| url | https://gnpje.sgh.waw.pl/Which-Capital-Structure-Theory-nExplains-Financial-Behaviour-nof-Small-and-Medium,159035,0,2.html |
| work_keys_str_mv | AT jacekjaworski whichcapitalstructuretheoryexplainsfinancialbehaviourofsmallandmediumsizedenterprisesevidencefrompoland AT leszekczerwonka whichcapitalstructuretheoryexplainsfinancialbehaviourofsmallandmediumsizedenterprisesevidencefrompoland |