Keywords: capital structure, small and medium-sized enterprises, SMEs, SME finance, pecking order theory, Sweden, micro firms
Industry effects and micro firms' capital structure determinants empirical evidence from Swedish data
This paper empirically examines the relevance of the pecking order theory to explain the capital structure determinants of Swedish small- and medium-sized firms (SMEs) within different industries. The study is based on multiple regression models and employs panel data for 10,905 Swedish micro firms from the financial year 2007. The models include the main capital structure determinants identified in the capital structure literature. Generally, the empirical findings show that size, tangibility and profitability are important determinants of both the long- and short-term debt (STD) of micro firms within all industry sectors. The effect of age and tangibility on long- and STD is unstable and shifting, and depends to a large extent on industry affiliation. The findings indicate that the pecking order theory appears to be relevant to explain the capital structure of Swedish micro firms.