This paper aims to empirically investigate the capital structure determinants of small and medium-sized enterprises (SMEs) with a particular focus on short- and long-term debt.
Several methods were used to analyse a sample of 15,897 Swedish SMEs for which complete financial information was available for a four-year period following the 2008 financial crisis, i.e. the 2009-2012 period.
The results indicate that eight explanatory variables – i.e. size, age, growth, profitability, liquidity, asset tangibility, non-debt tax shields and industry affiliation – are associated to various extents with SME debt policy.
The current study is limited to examining a sample of Swedish SMEs in five industry sectors covering the 2009-2012 period. Further research could examine the generalizability of the present results by considering other countries, industry sectors and periods.
As debt policy influences firm performance, value and survival, SME owners and managers, regulators and financial institutions may benefit from studies considering a relatively large number of capital structure determinants, several of which are linked to short- and long-term debt in various ways.
This study is one of the few to examine the determinants of short- and long-term debt in SMEs, which play a fundamental role in the economy, using a large-scale cross-sectional database covering a period following the 2008 financial crisis.
