A demand-side approach to SMEs capital structure. Evidence from Argentina.

ANAHÍ BRIOZZO; HERNÁN VIGIER

Journal of Business and Entrepreneurship

Association for Small Business and Entrepreneurship

Año: 2009 p. 30 - 56

1042-6337

Corporate finance, especially capital structure theory, studies a firm?s decisions from a normative point a view: maximizing shareholder value.  In this paper we propose a descriptive approach to the understanding of how small and medium enterprises (SMEs) make their financing decisions. Considering owner-firm intertwinement as a fundamental characteristic of these firms, we include behavioral features as explanatory variables of capital structure. We test the implications of our approach in a sample of small Argentine firms. The evidence partially supports our hypothesis: the owner-manager?s age and her previous experience with personal debt are relevant in a SME?s financing choices, which we expect to reflect the owner?s level of aversion to risk and uncertainty.