Panikkos Poutziouris, Francis Chittenden and Nicos Michaelas
This paper documents the findings from an extensive postal survey conducted in 1997‐98, which looks at the tax affairs of small firms, both incorporated and unincorporated. Tax…
Abstract
This paper documents the findings from an extensive postal survey conducted in 1997‐98, which looks at the tax affairs of small firms, both incorporated and unincorporated. Tax planning practices of small firms in the UK, and the implications of these practices on working capital and investment in these businesses, are considered. The results indicate that tax planning in most small firms is not very sophisticated and this has an effect on investment decisions in these businesses. As a result of poor tax planning practices small firms are not in a position to utilise fully all available tax reduction mechanisms. Instead they have to rely on mechanisms that can be decided upon after the accounting year end; unfortunately these involve the withdrawal of money from the business (eg pension schemes, salaries/bonuses). The results presented in this paper illustrate that the decision concerning the level of pension fund contributions and drawings/salaries, and subsequently the level of retained profits, will depend on both financial (business needs and market characteristics) as well as non‐financial (management characteristics) factors. However, the present combination of these factors in the small business sector favours the extraction of profits out of the business rather than the reinvestment of profits that will enhance the creation of wealth and employment. Based on the beliefs and expectations of small business owner/directors a number of tax incentives are discussed that the government could introduce in order to enhance the financial development and prosperity of small firms.
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Nicos Michaelas, Francis Chittenden and Panikkos Poutziouris
Although earlier capital structure theories, grounded within the finance paradigm (agency theory, transaction cost theory etc), have contributed to a deeper understanding of the…
Abstract
Although earlier capital structure theories, grounded within the finance paradigm (agency theory, transaction cost theory etc), have contributed to a deeper understanding of the capital structure puzzle, recent efforts suggest that research for the missing pieces of the puzzle should continue. This paper considers that these missing pieces of the puzzle could be diverse non‐financial and behavioural factors influencing capital structure decisions, that have received relatively little attention from finance researchers. The paper reports on an exploratory attempt to use interview techniques for the study of capital structure in small firms. Interviews can provide evidence about non‐financial and behavioural variables that quantitative analysis cannot. The paper develops a model for understanding capital structure decision making in small firms. It analyses the responses of small business owners/managers concerning the management of the financial structure of their firms and the factors that influence their capital structure decisions. Small business owners’ responses indicate that although a number of different financial variables may affect their capital structure decisions, other non‐financial and behavioural factors such as the need for control, risk propensity, experience, knowledge and goals may be more important in influencing the capital structure of their firms, at any time. The results indicate that significant progress in understanding the factors that influence capital structure may be achieved if financial researchers incorporate management theory in their studies, so that financial as well as non‐financial and behavioural factors are explored.
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Muhammad Riaz, Shu Jinghong and Muhammad Nadeem Akhtar
The main goal of this study is to analyze how monetary debt effects firm behavior of 167 registered manufacturing companies in G-7 countries.
Abstract
Purpose
The main goal of this study is to analyze how monetary debt effects firm behavior of 167 registered manufacturing companies in G-7 countries.
Design/methodology/approach
The sample of the present study is taken from the listed firms in G-7 countries. For the building companies, the yearly financial statements of 2007–2018 have been taken from world stock exchange and Thomson Reuters Data Stream. In this study, regression analysis are directed with panel data over the period of 2007–2018 using ordinary least square summary statistics, correlation matrix and generalized method moments. Data were analyzed by employing E Views and Stata 13 software.
Findings
The significant findings of the current study indicated that fixed assets, tangible assets, taxes, net cash and profitability have positive association with debt level.
Research limitations/implications
The current work include only registered manufacturing firms in G-7 countries. Moreover, ownership types are not accounted for in this study.
Practical implications
The current analysis is an empirical investigation of antecedents of debt regarding G-7 countries with up-to-date data. Various regression inquires have been made to design the models using different measures of debt and measure of firm performance indicators. These works will assist G-7 countries firms to know the effects of identified factors on time raising debt level.
Originality/value
The current work has been finalized using genuine data of yearly reports and database. This study incorporated antecedents of debt, which have limited discourse in prior literature. Furthermore, this study explores the connection between debt level and firm performance of G-7 countries.
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Ellen Martins, Nico Martins and Fransie Terblanche
In some organizations action is taken to stimulate creativity and innovation. The right steps may have been taken, such as involving employees in decision making, recruiting and…
Abstract
In some organizations action is taken to stimulate creativity and innovation. The right steps may have been taken, such as involving employees in decision making, recruiting and appointing employees who evidence characteristics of creativity, setting standards for work performance and giving regular feedback, yet creativity and innovation are hampered in some way. The culture of an organization may be a factor contributing to the extent to which creativity and innovation occur in an organization (Johnson, 1996; Judge et al., 1997; Pienaar, 1994; Shaughnessy, 1988; Tesluk et al., 1997; Tushman & O’Reilly, 1997 in Martins & Terblanche, 2003). The current organizational culture and the demands of creativity and innovation may lead to a conflict situation.
Darush Yazdanfar and Peter Öhman
This paper aims to empirically investigate the existence of dynamic capital structure among small and medium-sized enterprises (SMEs) across their life cycle stages.
Abstract
Purpose
This paper aims to empirically investigate the existence of dynamic capital structure among small and medium-sized enterprises (SMEs) across their life cycle stages.
Design/methodology/approach
The analysis examined a sample of 15,952 SMEs across five industry sectors for the 2009-2012 period. Several techniques, including ANOVA and multivariate regressions, were used to analyse firm-level data.
Findings
The findings suggest that start-up SMEs, on average, rely on equity capital, and that the level of equity capital increases as firms age. The short-term debt level is particularly high in early life cycle stages, decreasing later on. The long-term debt ratio is positively related to firm age, although it is low in all life cycle stages investigated.
Practical implications
The findings may help several parties, including firm owners, to better understand how capital structure can be related to various life cycle stages. Such an understanding may help these actors use financial resources efficiently.
Originality/value
To the authors’ best knowledge, little research has addressed whether there are any differences in financing patterns over the firm life cycle.
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Robert D. Hisrich and Mateja Drnovsek
Interest in the field of entrepreneurship has significantly increased among academics, practitioners and government officials in the past decade both in the USA and in Europe. The…
Abstract
Interest in the field of entrepreneurship has significantly increased among academics, practitioners and government officials in the past decade both in the USA and in Europe. The increased interest is reflected in the increased number of courses, majors and minors at colleges and universities throughout the world; the increased number of endowed chairs; the increased number of journals in the field; the increased coverage of the field by the media; and the increased interest in the provision of government support. In light of this significant increased interest, it is important to understand the state of research in the field in Europe in the last few years, the focus of this article.