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Financing SMEs: a model for optimising the capital structure

Moro, A.; Lucas, Michael; Grimm, U. and Grassi, E. (2010). Financing SMEs: a model for optimising the capital structure. In: 17th Annual Global Finance Conference, 27-30 June 2010, Poznan.

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Abstract

This paper argues that the existing finance literature is inadequate with respect to its cov-erage of capital structure of small and medium sized enterprises (SMEs). In particular it is argued that the cost of equity (being both conceptually ill defined and empirically non quantifiable) is not applicable to the capital structure decisions for a large proportion of SMEs and the optimal capital structure depends only on the mix of short and long term debt. The paper then presents a model for optimising the debt mix and demonstrates its practical application using an Italian firm’s debt structure as a case study.

Item Type: Conference Item
Copyright Holders: 2010 Authors
Keywords: capital structure; equity; short-term debt; long-term debt
Academic Unit/Department: Open University Business School
Mathematics, Computing and Technology > Mathematics and Statistics
Item ID: 24087
Depositing User: Andre Moro
Date Deposited: 23 Nov 2010 15:41
Last Modified: 24 Oct 2012 13:18
URI: http://oro.open.ac.uk/id/eprint/24087
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