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Determinants of capital structure in Irish SMEs

Mac An Bhaird, Ciarán and Lucey, Brian (2009) Determinants of capital structure in Irish SMEs. Small Business Economics . ISSN 1573-0913

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This paper presents an empirical examination of firm characteristic determinants of the capital structure of a sample of 299 Irish small and medium sized firms (SMEs). Hypotheses formulated from pecking order and agency theories incorporating a financial growth life cycle approach are tested on a number of multivariate regression models. 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 generalization of Zellner's (1962) Seemingly Unrelated Regression approach (SUR) is used to examine industry effects and to test the stability of parameter estimates across sectors. Results suggest 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 collateralizable 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.

Item Type:Article (Published)
Additional Information:The original publication is available at
Uncontrolled Keywords:Capital structure; SME; Zellner's SUR model;
Subjects:Business > Industries
DCU Faculties and Centres:DCU Faculties and Schools > Faculty of Humanities and Social Science > Fiontar
Publisher:Springer Netherlands
Official URL:
Use License:This item is licensed under a Creative Commons Attribution-NonCommercial-Share Alike 3.0 License. View License
ID Code:4529
Deposited On:23 Apr 2009 14:16 by Ciaran MacAnbhaird. Last Modified 23 Feb 2017 09:55

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