Pecking order theory versus trade-off theory : are service SMEs’ capital structure decisions different?

• Autor(a) principal: Serrasqueiro, Zélia
• Data de Publicação: 2011
• Outros Autores: Armada, Manuel José da Rocha, Maças Nunes, Paulo
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/1822/17966
• topic: Other firms; Pecking Order Theory; Service SMEs; Trade-Off Theory; Two-step estimation method; Social Sciences

This paper seeks to analyse if the capital structure decisions of service small and medium-sized enterprises (SMEs) are different from those of other types of firm. To do so, we consider four research samples: (i) 610 service SMEs; (ii) 126 service large firms; (iii) 679 manufacturing and construction SMEs; and (iv) 132 manufacturing and construction large firms. Using the two-step estimation method, the empirical evidence obtained in this study shows that the capital structure decisions of service SMEs are different from those of other types of firm. Service SMEs’ capital structure decisions are closer to the assumptions of Pecking Order Theory and further removed from those of Trade-Off Theory compared with the case of other types of firm.