Are there nonlinear relationships between the profitability of Portuguese service SME and its specific determinants?

Using quantile regressions, this paper examines the possibility of significant nonlinear relationships between the profitability of Portuguese service small- and medium-sized enterprises (SMEs) and its specific determinants. The results lead to the conclusion that there is a significant nonlinearity between specific determinants and profitability in Portuguese service SMEs. In the lower quantiles of the distribution of profitability of Portuguese SMEs, it is found that profitability on the one hand is catalysed by size, long-term debt and managerial control, and on the other hand, it is restricted by risk and research and development intensity. In the upper quantiles of the profitability distribution of Portuguese service SMEs, liquidity and research and development intensity serve as catalysers of profitability, while long-term debt restricts the level of profitability.     

Capital Structure of Portuguese Service Industries: A Panel Data Analysis

Using panel data for the period 1999–2003, this study shows that internal and external financing are not perfect substitutes, not corroborating the theorem of Modigliani and Miller. Portuguese service industries prefer internal to external financing, corroborating Pecking Order theory. The bigger the size of the company, the greater the level of debt, corroborating Trade-Off and Signalling theories. The negative relationship between the amount of fixed capital and debt corroborates Agency theory. The results allow us to conclude that debt contributes to improving management efficiency, agency problems between shareholders and creditors having little relevance.     

Non-linear relationships between growth opportunities and debt: Evidence from quoted Portuguese companies

This paper analyses the relationship between growth opportunities and debt of quoted Portuguese companies using various panel estimators. The results show a cubic relationship between growth opportunities and debt. When companies' growth opportunities are low and high, the relationship between growth opportunities and debt is positive. For intermediate levels of growth opportunities, the results show the existence of a negative relationship between growth opportunities and debt. These results suggest that the relationship between companies' growth opportunities and debt is influenced by complex aspects in companies' capital structure decisions. The empirical results suggest that creditors recognize high growth opportunities when such opportunities exist, and debt is a way to discipline managers' actions in the presence of low investment opportunities. For intermediate levels of growth opportunities, the subinvestment problems seem to be relevant in explaining the relationship between growth opportunities and debt.     

Industry Effects on the Determinants of Unquoted SMEs' Capital Structure

This paper reports a study of 3500 unquoted, UK small and medium sized enterprises (SMEs). The objectives of the research were to test various hypotheses concerning the determinants of SME capital structure and to establish whether and how the relationship of these determinants to long- and short-term debt varied between industries. Long-term debt was found to be related positively to asset structure and company size and negatively to age; short-term debt was related negatively to profitability, asset structure, size and age and positively to growth. Significant variation across industries was found in most of the explanatory variables. The effect of growth on short-term debt, however, was consistent across industries whilst profitability had no effect on long-term borrowing in any industry.     

基于分行业面板数据的服务业全要素生产率分析——以浙江省为例

文章利用面板单位根与协整分析技术构建面板数据模型,以浙江为例,对服务业分行业的全要素生产率进行估算,在此基础上分析了各行业全要素生产率的增长率及对产出的贡献率。研究结果表明,相比资本密集型行业,劳动密集型和知识密集型行业资本弹性系数小于劳动力弹性系数;相比生活型服务业,生产型服务业的全要素生产率的增长率较快,对产出的贡献率较高;服务业分行业的全要素生产率的增长率及对产出的贡献率呈现不断提高态势。     

Gibrat’s law: empirical test of Portuguese service industries using dynamic estimators

Using dynamic panel estimators, this article shows rejection of Gibrat’s law for Portuguese companies in the service sector. In companies as a whole, we find that growth depends positively on growth in the previous period and on debt, and depends negatively on size. When we subdivide the sample into small- and medium-sized companies and large companies, the results are similar to those obtained when we take companies as a whole. The differences concern the relationship between ownership control and growth, which is positive in the case of small- and medium-sized companies, and the non-influence of growth in the previous period on growth in the current period in the case of large companies.     

Debt signaling and outside investors in early stage firms

By imposing a market like governance and directing entrepreneurs towards professional management, debt, and especially business debt, can serve as a reliable signal for outside equity investors. Such signals of firm accountability can alleviate the stringent information asymmetry at the early stages of the firm, and become stronger for bank business debt, in the presence of personal debt, and in high capital industries. Using the Kauffman Firm Survey, we find evidence consistent with our hypotheses. Outside investors can rely on the governance role of debt and its underpinnings such as the bank-firm relationship. We also corroborate that young firms tend to focus on growth rather than profitability.     

Service industries,growth dynamics and financial constraints

This work represents a first attempt to study the effects of financial constraints on firm growth within the business services as it can be argued that firms are different not only in terms of size but also in the way they operate in a specific industry. Thus, firms can be either characterized by the use of intensive professional knowledge or, alternatively, by the use of a workforce with no specific professional skills. For the business services included, the results reveal the relative importance of internal sources of financing with respect to the external ones. The liquidity constraints mainly affect the growth of industries requiring qualified labor pool, such as computer programming and information service activities, as well as the professional and scientific ones. In these sectors, foremost operate small firms with a superior innovation capacity; therefore, they are considered risky and face difficulties in raising debt capital on favorable terms.     

Dynamics of Firm Profitability and Growth: Do Knowledge-Intensive (Business) Services Persistently Outperform?

This paper explores the persistence of profitability and growth for firms operating in the Greek service sector, paying special attention to knowledge-intensive services (KIS) and knowledge-intensive business services (KIBS). The generalized method of moments is used on a rich panel of firms over a recent nine-year period. Quantile regressions are complementarily applied for KIS and KIBS industries. The key results from both growth and profit dynamics suggest that firms in KIS and KIBS industries persistently outperform firms in less knowledge-intensive service industries, pointing to strategic advantages of the former. Importantly, KIS and KIBS seem to be able to sustain their growth and profitability persistent trends even in times of crisis. Further insight into these issues is provided by the quantile analysis, the exploration of the profitability and growth inter-linkages, and the investigation of differences among various size groups in KIS and KIBS.     

Capital Structure Across Industries

The purpose of this article is to examine the capital structure across different industries for companies quoted on a stock exchange and headquartered in the United States. The paper demonstrates significant difference in the capital structure depending on the industry where the company operates. The debt ratio sensitivities to the explanatory variables differ significantly between the five industries studied. Almost every significant coefficient obtained in our regressions is in accordance with capital structure theory and other studies. Debt ratio is negatively related to profitability, growth, and age, while asset structure and company size are positively related. However, the debt ratio of the 50 largest companies in the sample is negatively related to company size, which gives support to a currency hedging hypothesis.