Are regional institutional factors determinants of the capital structure of SMEs?

This paper analyses the role that institutional factors play in explaining differences in the capital structure of small and medium-sized enterprises (SMEs) across regions belonging to a single country. Specifically, it studies the effect of the development of the financial sector and of the economic situation on leverage of firms. Furthermore, the standard firm-factor determinants of debt, such as firm size, asset structure, profitability, growth, business risk and age are also incorporated. For this empirical study, we use a sample of 638 SMEs representing every Spanish region for the period 1999-2007, and apply the panel data methodology. Our results suggest that the capital structure depends on the regional financial sector and the regional economic situation which implies that institutional factors at regional level help to better explain financing decisions of SMEs

A rush of blood to the head: Temporal dimensions of retrenchment, environment and turnaround performance

In this work we test the general assumption in the turnaround literature that time is critical for firm survival, especially during the retrenchment stage.We study three time dimensions of change at this stage: timing, speed and rhythm. Drawing on the downward spiral and threat-rigidity perspectives, we posit that the positive impact these time dimensions have on turnaround performance is highly contingent on two types of environment. Our findings, based on a sample of 263 declining US firms over a 26-year period (1983e2009), demonstrate that an early timing of retrenchment has a positive impact on performance when the environment is munificent. On the contrary, an early timing has a negative impact when the environment is dynamic. We also note that a fast pace of retrenchment positively impacts firm performance in dynamic environments. Finally, we find that declining firms display better performances when following an irregular rhythm of retrenchment, both in highly munificent and highly dynamic environments. Our results indicate that, in general, declining firm performance improves with time-aggressive retrenchment actions in both types of environment. We discuss the contribution of our research to the turnaround literature, and the downward spiral and threat-rigidity perspective

Desarrollo regional y estructura de capital de las PYME

This article studies the influence of regional institutional environment, measured as regional development, on capital structure of small and medium-sized enterprises (SMEs). Furthermore, the standard firm-factor determinants and the business sector of the firm are also incorporated. To this end, a sample of 6,560 Spanish firms for 2007 is analysed, where all regions of Spain and all sectors, except the financial sector, are considered. Spain provides a suitable and unexplored laboratory for the analysis of regional differences in the financial structure of SMEs, since, on the one hand, SMEs constitute the most relevant firms in this country, and on the other hand, Spain shows regional disparities at various levels. Moreover, the empirical analysis uses Partial Least Squares (PLS), a variance-based structural equation modelling (SEM). In this respect, PLS has several clear advantages to multiple linear regression (MLR). Thanks to this study, how each of these factors explains the variation in the capital structure could be shown. Moreover, the results show that although firm factors and the business sector explain a large proportion of the variance of capital structure of SMEs, it is important to take into account the regional institutional environment to better ascertain the level of debt of SMEs in a single country.Este artículo estudia la influencia del entorno institucional regional, medido a través del desarrollo regional, en la estructura de capital de las pequeñas y medianas empresas (PYME). Además, este estudio también considera los factores de empresa clásicos determinantes de las decisiones de financiación y el sector de actividad de la empresa. Para el análisis empírico, se toma una muestra de 6.560 PYME españolas donde todas las regiones de España y todos los sectores, excepto el financiero, son considerados. España ofrece un laboratorio adecuado e inexplorado para el análisis de las diferencias regionales en la estructura financiera de las PYME, ya que, por una parte, las PYME son las empresas más preponderantes en el mismo y por otro lado, España muestra diferencias regionales a varios niveles. Como metodología se utiliza un modelo de ecuaciones estructurales basado en la varianza (Partial Least Squares-PLS). A este respecto, PLS ofrece una serie de ventajas claras sobre el análisis de regresión lineal múltiple. Gracias a este estudio, se ha podido identificar cómo cada una de las variables analizadas explica la variación en la estructura de capital. Además, los resultados muestran que aunque los factores de empresa y el sector de actividad explican una gran proporción de la varianza de la estructura de capital de las PYME, es importante tener en cuenta el entorno institucional regional para determinar mejor el nivel de deuda de las PYME en un país determinado

Kernel alternatives to aproximate operational severity distribution: an empirical application

The estimation of severity loss distribution is one the main topic in operational risk estimation. Numerous parametric estimations have been suggested although very few work for both high frequency small losses and low frequency big losses. In this paper several estimation are explored. The good performance of the double transformation kernel estimation in the context of operational risk severity is worthy of a special mention. This method is based on the work of Bolancé and Guillén (2009), it was initially proposed in the context of the cost of claims insurance, and it means an advance in operational risk research

Trade Credit as a Sustainable Resource during an SME’s Life Cycle

Inadequate access to finance for small and medium-sized enterprises (SMEs) can present a major impediment to SMEs’ contribution towards driving sustainable economic growth. The aim of this article is to investigate the role of life cycle on SME financing decisions while focusing on trade credit. To this end, we study whether trade credit and its firm-factor determinants differ depending on the stage of life cycle of the SMEs. For the empirical analysis, a sample is employed of manufacturing SMEs operating in 12 European Union countries over the period 2008–2014 and a panel data model with fixed effects is applied. We find that the business life cycle influences trade credit and that this influence is stronger in young firms, although this relation is non-linear across the firms’ life cycle. We further show that the impact of firm-factor determinants on trade credit differs across the business life cycle in terms of magnitude levels. Our results demonstrate that the business life cycle matters when analysing trade credit, and it should therefore be considered when managers and policymakers strive to solve the financial problems of an SME and to consequently incorporate the SME into the sustainable economy.Junta de Andalucía proyecto SEJ-55

El valor informativo de los dividendos en las empresas españolas

En este trabajo hemos intentado contrastar la hipótesis de la información de los dividendos. Para ello, hemos estudiado si los cambios en los dividendos son seguidos por cambios en las ganancias futuras en la misma dirección. El estudio empírico se realiza sobre un panel de empresas cotizadas españolas durante el período 1995- 2004. Para estimar los cambios en las ganancias utilizamos tanto el modelo lineal –que propusieron Nissim y Ziv (2001)– como el no lineal –que utilizaron Grullon et al. (2005)– y aplicamos la metodología de Fama y Macbeth (1973) para tratar nuestro panel de datos. Los resultados obtenidos muestran que para t=1 se aprecia una relación significativa y positiva entre los cambios en los dividendos y los cambios en las ganancias, por lo que nuestro estudio se alinea con la evidencia empírica que apoya la hipótesis de la información.In this paper we have sought to test the information content of dividends hypothesis. To this end, we study whether dividend changes are followed by earnings changes in the same direction. The empirical study focuses on all companies quoted on the Spanish Stock Exchange over the period 1995-2004. To test this hypothesis we apply the models of earnings expectations which have recently been used: specifically the linear model proposed by Nissim and Ziv (2001) and the nonlinear model proposed by Grullon et al. (2005). Besides, we apply the methodology of Fama and Macbeth (1973) to treat our data panel. We find that dividend changes provide information about future earnings changes at least in the first year after the dividend change. This result is in line with empirical evidence that supports the theory of information

Regional economic resilience in the European Union: a numerical general equilibrium analysis

Using a spatial general equilibrium model, this paper investigates the resilience of EU regions under three alternative recessionary shocks, each of them activating different economic adjustments and mechanisms. We measure the vulnerability, resistance, and recoverability of regions and we identify key regional features affecting the ability of regions to withstand to and recover from unexpected external shocks. The analysis reveals that the response of regions varies according to the nature of the external disturbance and to the pre-shock regional characteristics. Finally, it seems that resilience also depends on factors' mobility

Capital structure across Italian regions: the role of financial and economic differences

The objective of this article is to analyse how regional financial and economic differences influence the capital structure decisions of small and medium-sized enterprises (SMEs). Specifically, this paper considers the regional financial and economic differences in four ways: the development of the financial sector in the region, bank market concentration, the financial cost of obtaining funds, and regional economic development. For this purpose, we used unbalanced panel data from 26,504 SMEs across the 20 Italian regions and over the period from 2004 to 2010. This work is completed with an analysis of a no-crisis (2004–2007) and a crisis period (2008–2010). The results show that the regional differences in the degree of financial sector development, banking concentration, and local economic situations have a significant impact on the leverage level of SMEs, while the cost of obtaining funds is only relevant during a period of economic stability. These results suggest that insights can be derived from data disaggregation at the regional level inside the same country. These regional divergences in the capital structure of SMEs could influence regional economic resilience

Of losers and laggards: the interplay of material conditions and individual perceptions in the shaping of EU discontent

Two principal strands of scholarship analyse the material roots of European Union (EU) discontent. Some focus on the effects of regional decline, while others examine the role of individual socioeconomic factors. This paper brings these two perspectives together. We argue that EU discontent is a multifaceted phenomenon structured by the spatially-rooted interplay between individual and regional material conditions and subjective perceptions. We apply PLS-SEM to Eurobarometer public opinion data (2018-2019) and find that the geographical location and the socioeconomic position shape EU discontent directly. However, material factors' relevance for EU discontent is the greatest in structuring individual future expectations. Furthermore, democratic dissatisfaction turns out to be a key factor, pointing to the importance of institutional perceptions in the geography of discontent

Of losers and laggards: The interplay of material conditions and individual perceptions in the shaping of EU discontent

Two principal strands of scholarship analyse the material roots of European Union (EU) discontent. Some focus on the effects of regional decline, while others examine the role of individual socioeconomic factors. This paper brings these two perspectives together. We argue that EU discontent is a multifaceted phenomenon structured by the spatially-rooted interplay between individual and regional material conditions and subjective perceptions. We apply PLS-SEM to Eurobarometer public opinion data (2018-2019) and find that the geographical location and the socioeconomic position shape EU discontent directly. However, material factors' relevance for EU discontent is the greatest in structuring individual future expectations. Furthermore, democratic dissatisfaction turns out to be a key factor, pointing to the importance of institutional perceptions in the geography of discontent