Financial sources, capital structure and performance of social enterprises: empirical evidence from India

This study investigates the existence of an optimal capital structure for small and medium enterprise (SME) hotels through the analysis of the relationship between financing decisions and financial performance in a large sample of Italian hotel SMEs. The results show that hotel SMEs face an optimal capital structure that allows them to maximize returns to investors, while instead having both too little and too much debt reduces their financial performance. This notwithstanding, we show that hotel SMEs are not particularly concerned with optimizing their capital structure, and their funding behavior is deeply connected with the availability of internally available funds, a typical pecking order behavior, and they result extremely slow in converging toward their optimal level of leverage so that they could improve their performance by adopting a more sophisticated financial strategy.

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Non-Financial Stakeholder Relationship Costs as a Determinant of Capital Structure: Empirical Evidence from First-Time Business Start-Ups

SSRN Electronic Journal ◽

10.2139/ssrn.909201 ◽

2006 ◽

Author(s):

Tom Franck ◽

Nancy Huyghebaert

Keyword(s):

Capital Structure ◽

Empirical Evidence ◽

Start Ups ◽

First Time ◽

Stakeholder Relationship

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Corporate Governance Quality and Capital Structure Decisions: Empirical Evidence from Canada

Advances in Social Sciences Research Journal ◽

10.14738/assrj.69.7140 ◽

2019 ◽

Vol 6 (9) ◽

pp. 303-311

Author(s):

Dan Lin ◽

Lu Lin

Keyword(s):

Corporate Governance ◽

Capital Structure ◽

Empirical Evidence ◽

Composite Index ◽

Free Cash Flow ◽

Debt Financing ◽

Cost Of Debt ◽

Financing Decisions ◽

Governance Quality ◽

Corporate Governance Quality

This study examines the relationship between corporate governance quality and capital structure of firms listed on the S&P/TSX composite index between 2009 and 2012. Using an aggregate corporate governance index, this study finds support for the outcome hypothesis, which argues that capital structure is an “outcome” of corporate governance quality. Governance quality is found to be positively associated with firms’ leverage. Firms with lower governance quality have lower leverage as these firms’ managers do not like to have only little free cash flow leftover or have extra constraints imposed by debt financing. In contrast, firms with higher governance quality are more leveraged because these firms have lower agency costs and thus lower cost of debt financing. As a result, they can take on more debts. The empirical evidence from this study illuminates important links between governance quality and financing decisions of firms.

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