The Financial Growth Life Cycle: An Empirical Examination of Irish SMEs

16 Pages Posted: 5 Jun 2007 Last revised: 14 Jul 2009

See all articles by Ciaran Mac an Bhaird

Ciaran Mac an Bhaird

Dublin City University

Brian M. Lucey

Trinity Business School, Trinity College Dublin; University of Sydney Business School; University of Economics Ho Chi Minh City

Date Written: June 5, 2007

Abstract

This paper examines the financing of small and medium sized enterprises (SMEs hereafter) through a financial growth life cycle paradigm. Reporting the financing patterns of 299 Irish SMEs across six age categories, the relative importance of sources of debt and equity finance for each age category is revealed. Observed financing patterns incorporate elements of agency and pecking order theories, and emphasise the primary importance of internal equity in financing of the firm. Results suggest support for the financial growth life cycle, although contrary to conventional wisdom firms in the youngest age category report a relatively high use of debt finance. This may be explained by the provision of the personal assets of the firm owner to secure that debt.

Keywords: Life cycle growth model, SME financing

JEL Classification: D92, G30, G32

Suggested Citation

Mac an Bhaird, Ciarán and Lucey, Brian M., The Financial Growth Life Cycle: An Empirical Examination of Irish SMEs (June 5, 2007). Available at SSRN: https://ssrn.com/abstract=991296 or http://dx.doi.org/10.2139/ssrn.991296

Ciarán Mac an Bhaird (Contact Author)

Dublin City University ( email )

Ireland 9
Dublin 9, leinster 9
Ireland

Brian M. Lucey

Trinity Business School, Trinity College Dublin ( email )

The Sutherland Centre, Level 6, Arts Building
Dublin 2
Ireland
+353 1 608 1552 (Phone)
+353 1 679 9503 (Fax)

University of Sydney Business School ( email )

Cnr. of Codrington and Rose Streets
Sydney, NSW 2006
Australia

University of Economics Ho Chi Minh City ( email )

59C Nguyen Dình Chieu
6th Ward, District 3
Ho Chi Minh City, Ho Chi Minh 70000
Vietnam

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