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Owner/managers' financing preferences and the proportion of firm's capital structure: evidence from successful SMEs in Malaysia

Mohamed Zabri, Shafie and Ahmad, Kamilah and Jonathan, Lean (2014) Owner/managers' financing preferences and the proportion of firm's capital structure: evidence from successful SMEs in Malaysia. In: The International Conference on Business Strategy and Social Sciences 2014, 16-17 August 2014, Kuala Lumpur, Malaysia.

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Abstract

The importance of economic contributions of Small and Medium-sized Enterprises (SMEs) around the world particularly in developing countries requires better understanding of financial practices among SMEs. This research investigates the financial practices among SMEs in Malaysia, within the list of Enterprise 50 award winners from 1998 to 2010. Focuses are on SME owner/managers' level of financing preferences towards available sources of financing and also its relationship with the proportion of the firm's capital structure. Electronic surveys were conducted with a response rate of 29.5%. SME managers are found to have a higher preference towards debt financing from banking institutions which is shown by the average debt{o-equity ratio among these SMEs of 57 to 43. Account payable and retained earnings were two types of liabilities with higher proportion in the firm's capital structure. Bivariate analysis reveals that owner/managers' preferences towards internal equity financing, external equity financing and debt financing were found to have a statistically significant relationship with the proportion of firms' short-term financing, long-term financing and also equity financing. This research enhances the existing body of knowledge of financial practices of SMEs, particularly within the context Malaysian SMEs by providing the information on manager's level of financing preferences and its relationship with the proportion of firm's capital structure.

Item Type: Conference or Workshop Item (Paper)
Uncontrolled Keywords: financing preferences; capital structures; SMEs
Subjects: H Social Sciences > HF Commerce
H Social Sciences > HG Finance
Divisions: Faculty of Technology Management and Business > Department of Technology Management
Depositing User: Normajihan Abd. Rahman
Date Deposited: 08 Mar 2015 07:34
Last Modified: 08 Mar 2015 07:34
URI: http://eprints.uthm.edu.my/id/eprint/6345
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