Corporate governance and debt structure

the case of Portuguese SMEs

  • António Pedro Pinto Instituto Politécnico de Viseu, Escola Superior de Tecnologia e Gestão, Viseu, Portugal. Centro de Investigação em Serviços Digitais – CISeD, Viseu, Portugal
  • Carla Manuela Henriques Instituto Politécnico de Viseu, Escola Superior de Tecnologia e Gestão, Viseu, Portugal. Centro de Matemática da Universidade de Coimbra, Coimbra, Portugal
  • José Manuel Rodrigues Instituto Politécnico de Viseu, Escola Superior de Tecnologia e Gestão, Viseu, Portugal
Keywords: property, corporate governance, debt structure, SMEs


Introduction: The study of corporate governance in financial decisions has gained relevance, particularly in debt structure, while remaining open how its characteristics influence such decisions. In this study, three forms of debt were considered (total, short term and medium/long term). 

Objectives: The study aims to analyze whether government influences corporate financing decisions, bearing in mind the nature of ownership (family vs. non-familiar). 

Methods: Multiple linear regression models to explain debt variables were estimated using least squares method with robust standard errors. 

Results: Family businesses have higher total indebtedness with managerial ownership playing a relevant role. Regardless of the property nature, higher return is associated with lower debt, while size has a positive impact on total debt. On the other hand, the nature of property is a differentiating factor in the way in which concentration of ownership is related to debt: In family-owned companies the concentration of ownership establishes a nonlinear (U-shaped) relationship with total indebtedness, but in non-family-owned companies the relationship between the two was not significant. 

Conclusions: Managerial ownership and concentration of ownership determine the debt structure differently in family and non-family businesses. 


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