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What Do We Know about the Capital Structure of Privately Held US Firms? Evidence from the Surveys of Small Business Finance
Author(s) -
Cole Rebel A.
Publication year - 2013
Publication title -
financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.647
H-Index - 68
eISSN - 1755-053X
pISSN - 0046-3892
DOI - 10.1111/fima.12015
Subject(s) - capital structure , leverage (statistics) , pecking order theory , pecking order , corporate finance , business , finance , accounting , financial economics , economics , debt , machine learning , evolutionary biology , biology , computer science
This study examines the capital‐structure decisions of privately held US firms using data from four nationally representative surveys conducted from 1987 to 2003. Book‐value firm leverage, as measured by either the ratio of total loans to total assets or the ratio of total liabilities to total assets, is negatively related to firm age and minority ownership; and is positively related to industry median leverage, the corporate legal form of organization, and to the number of banking relationships. In general, these results provide mixed support for both the Pecking‐Order and Trade‐Off theories of capital structure.