At variance with publically traded firms, small business firms face different issues related to such complexities
as shorter expected life, presence of estate tax, intergenerational transfer problems, and prevalence of implicit
contracts. Problems such as agency and asymmetric information are more complex (Ang, 1992) in the small
business industry. The literature proposes a variety of variables that might potentially affect the capital structure
of firms. In this study, we chose explanatory variables with reference to alternative capital structure theories and
previous empirical work. This study includes five proxy variables for governance: CEO Tenure, CEO Duality,
Board Size, Small Business Growth, and Family to examine their relationship with capital structure of firms.
At variance with publically traded firms, small business firms face different issues related to such complexitiesas shorter expected life, presence of estate tax, intergenerational transfer problems, and prevalence of implicitcontracts. Problems such as agency and asymmetric information are more complex (Ang, 1992) in the smallbusiness industry. The literature proposes a variety of variables that might potentially affect the capital structureof firms. In this study, we chose explanatory variables with reference to alternative capital structure theories andprevious empirical work. This study includes five proxy variables for governance: CEO Tenure, CEO Duality,Board Size, Small Business Growth, and Family to examine their relationship with capital structure of firms.
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