The Dynamics of SMEs' Capital Structure and Performance: Evidence From a Panel VAR

BSFA Working Paper Series No. 8

28 Pages Posted: 23 Oct 2018

See all articles by Christina E. Bannier

Christina E. Bannier

Justus-Liebig-University Giessen

Thomas Heyden

University of Giessen

Date Written: September 28, 2018

Abstract

We study the relationship between the capital structure and the performance of unlisted small and medium-sized firms in Germany. We employ a panel vector autoregressive model that allows to consider this relationship in a dynamic sense and accounts for potential endogeneity. While our results show that there is a strongly positive association between leverage and performance for medium-sized firms, we find no relation for small firms. This may be taken as evidence that small firms are unable to seize the performance-enhancing effects of higher leverage, thus refuting the tradeoff theory for this entrepreneurial size bracket.

Keywords: SMEs, Panel VAR, Dynamic Panel Data, Capital Structure, Corporate Finance

JEL Classification: G32

Suggested Citation

Bannier, Christina E. and Heyden, Thomas, The Dynamics of SMEs' Capital Structure and Performance: Evidence From a Panel VAR (September 28, 2018). BSFA Working Paper Series No. 8. Available at SSRN: https://ssrn.com/abstract=3257002 or http://dx.doi.org/10.2139/ssrn.3257002

Christina E. Bannier

Justus-Liebig-University Giessen ( email )

Licher Str. 62
Gießen, 35394
Germany
+49 641 99 22551 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
117
rank
233,459
Abstract Views
604
PlumX Metrics
!

Under construction: SSRN citations will be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information