What Do We Know About the Capital Structure of Privately Held Firms? Evidence from the Surveys of Small Business Finance
Financial Management 45 (Winter), 777-813.
68 Pages Posted: 26 Mar 2008 Last revised: 2 Jan 2014
Date Written: December 9, 2012
This study establishes a set of stylized facts about the capital-structure decisions of privately held U.S. firms, using data from four nationally representative surveys conducted from 1987-2003. 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.
Keywords: capital structure, pecking-order theory, privately held firm, small business, trade-off theory, SSBF
JEL Classification: G21, G32, L22, L26, M13
Suggested Citation: Suggested Citation