2019•Unpublished venueRequires access

Impact of firm characteristics on capital structure: Dutch SMEs

Joeri Reuvers

Abstract

This study investigates which firm-level determinants influences the capital structure of Dutch SMEs. The sample contains 11.583 firm-year observations in the period from 2010 till 2017. Using the fixed effect model, the firm-level determinants of two theories are investigated: the pecking order theory and agency cost theory. The results indicate that profitability, growth opportunities, tangibility and age are important firm-level determinants that influence the capital structure of Dutch SMEs. The relevance of past growth and size are not robust in this study. Overall, Dutch SMEs follow the pecking order theory. Robustness tests reveal that one industry follow the agency costs theory. In the other industries is the pecking order theory dominant.

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Key concepts: Pecking order theory, Capital structure, Agency cost, Profitability index, Pecking order, Principal–agent problem, Business, Order (exchange)