Access to finance and the type of ownership

: do different firms behave differently when constrained?

Abstract

The purpose of this thesis is to understand how European SME’s capital structure varies with credit restrictions, taking into account the type of ownership of the firm. Departing from the previous literature, I explicitly consider differences between public firms, family firms, business owned by other businesses, venture capitalists owned firms and singular owned firms. Using the ECB’s SAFE dataset I try to see if the behaviour of different types of ownership is by itself a differentiating factor. This is done for cases where firms are constrained and unconstrained. Moreover, the same is done considering constraints to different types of external financing in which we can distinguish bank loans, trade credit, credit lines and other type of external financing. Furthermore, this thesis also looks for differences in the way shareholders react when they are constrained vs. when they are not. The empirical results surprisingly show that in many cases, when firms are constrained they still increase their leverage ratio. However, when comparing the leverage level, the significant results suggest a decrease when constrained. For the constrained case, when I compare the types of shareholder, I find no significant differences between firms, while some firms show bigger percentages of increase in the leverage ratio when compared to others in the unconstrained case.

Date of Award	14 Mar 2018
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Diana Bonfim (Supervisor)