Firm-Level Determinants of the Financing Decisions of Small and Medium Enterprises: Evidence from Argentina |
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| Authors: | Anahí Briozzo Hernán Vigier Lisana B Martinez |
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| Institution: | 1. Departamento de Ciencias de la Administración, Universidad Nacional del Sur, Bahía Blanca, Argentina;2. IIESS (UNS-CONICET), Bahía Blanca, Argentinaabriozzo@uns.edu.ar;4. Centro de Emprendedorismo y Desarrollo Territorial Sostenible (CEDETS, UPSO-CIC), Bahía Blanca, Argentina;5. Departamento de Economía, Universidad Nacional del Sur, Bahía Blanca, Argentina;6. IIESS (UNS-CONICET), Bahía Blanca, Argentina;7. Facultad de la Micro, Peque?a y Mediana Empresa, Universidad Provincial del Sudoeste (UPSO), Bahía Blanca, Argentina |
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| Abstract: | This article studies the determinants of the financing decisions of small and medium enterprises (SMEs), which we characterize through three cases: trade-off behavior, pecking order, and extreme aversion to debt. We test our hypotheses using a dataset of firms from Bahía Blanca (Argentina) for two years: 2006 and 2010. We find that firm characteristics related to information asymmetries, such as firm age, size, and legal form; and personal factors, such as owner’s age and education; and perception of emotional bankruptcy costs, are relevant variables in SME financing behavior. The recognition of extreme aversion to debt motivates reconsideration of the underleverage problem of SMEs. |
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| Keywords: | Aversion to debt financing decisions pecking order small firms trade-off |
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