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This study aims to seek to analyse the relationships between profitability, productivity, external debt and growth in SMEs. The authors also analyse firm size and age as explicative variables of small and medium-sized enterprise (SME) growth.

In this paper the data were collected for 3309 SMEs for the period 2010–2019. The authors estimate the model using the system generalised method of moments dynamic estimator.

The results show that after a certain level of profitability, this determinant positively impacts SME growth. Productivity influences positively the firm growth. There is a positive effect of external debt on SME growth, which can be explained by the insufficiency of internally generated funds. The authors obtained a negative signal between size and firm growth, contradicting Gibrat's Law (1931). Moreover, the results suggest that SMEs grow less after a certain age, suggesting that small firms grow less after reaching the minimum scale of efficiency.

For SME owner-managers, this study enhances the importance of profitability and labour productivity for firm growth. For policymakers, the results suggest the need for favourable conditions for SMEs in accessing external finance.

Profitability negatively impacts on SME growth. However, the authors found that above a certain level of profitability, probably, as firms accumulate retained earnings, profitability has a positive effect on SME growth. Moreover, this study shows that labour productivity and debt positively impact on SME growth, evidencing the importance of the availability of financial resources to sustain the growth of these firms.

This paper aims to assess the vulnerability and resilience of the Spanish non-financial corporations (NFC) to the shock from the COVID pandemic with consolidated income accounts data, and shows comparative labor productivity and endowment of organizational capital of Spanish firms, as indicators of their capabilities at the outset of the new digital transformation wave proposed by the next generation EU program.

The paper first describes the recent evolution (quarterly 2020 data) of the Spanish non-financial corporate sector (gross value added, labor cost, capital formation, profits) in the assessment of the vulnerability and resilience of the sector to the shock of the COVID pandemic. Then second, it estimates a probit model to evaluate the EU country effects in the explanation of the different propensity firms in the European Company Survey database to adopt innovative management and organization practices.

In the Spring of 2020, the Spanish NFC were still recovering from the great recession (low resilience), and the severe contraction in value-added and profits of the corporate sector in the first three quarters of the year evidences its high vulnerability. The proved complementarity between organizational and information related assets implies that the low endowment of organizational capital of Spanish firms, could be a severe limitation for the advancement toward digitalization.

The aggregate corporate sector data used in the analysis of vulnerability and resilience of Spanish firms does not account for the heterogeneous effects of the pandemic across economic sectors (manufacturing and services, for example) and across firms (large versus small ones).

The paper complements the country-level analysis of the impact of the COVID pandemic in the Spanish economy with the analysis of the impact of the pandemic in the performance of the corporate sector. It provides one of the first analysis of the current endowment of organization capital of Spanish firms and highlights its relevance for productivity growth.

The study seeks to find the effect of financial leverage on the firm performance of non-financial companies listed in the Tokyo stock market.

The study collected data from 263 companies in the automobile and industrial producer sectors listed on the Tokyo stock exchange between 2001 and 2021. The generalized method of moments was used to estimate the effect of leverage on financial performance due to its ability to overcome the problems of endogeneity and autocorrelation.

The study found that the equity multiplier has a positive and statistically significant effect on return on assets (ROA), return on equity (ROE) and earning per share (EPS). The study discovered that the interest coverage ratio has a positive and statistically significant effect on ROA, ROE, EPS and Tobin’s Q. The results revealed that the degree of financial leverage and debt to earnings before interest, taxes, depreciation and amortization (EBITDA) have a negative and statistically significant effect on ROE, EPS and Tobin’s Q. The study also found that the capitalization ratios of the firms have a negative and statistically significant effect on ROA, ROE, EPS and Tobin’s Q.

The use of debt financing, which presents financial leverage, indicates that the companies can make enough earnings to pay off the interest and principal (debt service obligations), which were shown by the interest coverage ratio, as well as to pay all the long-term fixed expenses, which were shown by the fixed charge coverage ratio. Interest and fixed charge coverage have a positive statistically significant effect on the financial performance of automobile and industrial producer companies.

The study focused on the effect of financial leverage on financial performance by relying on pecking and trade-off theories to contribute to the existing body of literature in finance.

This study aims to measure impact of several firm-specific factors on alternative measures of leverage. The authors also aim to study impact of the subprime crisis on such associations.

The authors utilized an unbalanced panel data of 973 firm-year observations on 47 UK listed non-financial firms for the years 1990–2019. Book-based and market-based long-term and total leverage measures have been used as explained variables. The explanatory variables are profitability, size, two measures of growth, asset tangibility, non-debt tax shields, firm age and product uniqueness. Fixed effect and random effect models with clustered robust standard errors have been utilized for data analysis. To find the effect of subprime crisis, original dataset was split to create pre-crisis and post-crisis datasets.

The authors find that profitability significantly reduces leverage while firms having more tangible assets use significantly more debt in capital structure. Firm size and non-debt tax shield have statistically insignificant positive impact on leverage. Having more unique products reduces use of external debt, albeit insignificantly. Growth, when measured as market-to-book ratio, has inconsistent impact, whereas capital expenditure insignificantly reduces leverage. Age is found to be an insignificant predictor of leverage. After the subprime crisis, firms started relying more on internal fund instead of external debt, more particularly short-term debt. Having more collateral is gradually becoming more important for availing external debt.

Data limitations restrict generalization of the findings.

This is one of the pioneering attempts to show how subprime crisis altered the theoretical domain of capital structure research in the UK.

The paper investigates if the process that led to the birth of the Euro Area had a significant impact in homogenizing the capital structure decisions of European firms since the first introduction of the common currency.

A large sample of firms was constructed, and a Tobit-censored regression model was utilized to investigate the determinants of firms' observed capital structures. The Black–Scholes–Merton model was used to infer market values of assets, as well as the volatility of those values, from the observed market values of equity and the corresponding volatility. The existing differences in national tax rules were considered for estimating firm-specific marginal tax rates.

It was found that, despite the currency union and the institutional harmonization process, certain factors still play a different role. In particular, the impact of profitability is consistent with the pecking order view in some countries, and with the trade-off theory in others. Assets risk, measured as the annualized volatility of the market enterprise value, is the best predictor of observed leverage ratios. The sector of activity is significant in determining leverage decisions even when assets' risk is taken into account. Despite the monetary union and the increased financial and institutional integration in the Euro Area, the country of origin still plays a significant role in capital structure decisions, suggesting that other country-level factors may affect firms' financing behaviour.

The paper indicates that, despite the long harmonization process of institutions, regulations and public budget required to join the Euro, firms' financing decisions are still affected by country-specific factors once the common currency is introduced. Therefore, new entrant countries in the Euro area should not expect their companies to immediately conform with those located in other countries within the common currency area.

This article investigated the impact of the currency change from national currencies to the Euro on the determinants of capital structure choices. It was shown that, despite the long harmonization process that led to the birth of the Euro Area, national factors still affect firms' financing decisions. This provides guidance for policymakers in countries that are planning to join the Euro about the impact this will have on firms' financing decisions in the entrant country.

Funding infrastructural facilities of higher institutions, especially in some developing nations such as Nigeria, that is under-funded, is a challenge in the current era. Private organisations participation in infrastructure development via a proposed expanded corporate social responsibility (ECSR) may enhance infrastructural facilities provision. There is a paucity of literature regarding ECSR, a form of infrastructure tax relief providing infrastructural facilities for higher institutions. Therefore, the study investigated the role of private organisations via a proposed ECSR in the provision of infrastructure and proffer ways to enhance higher institutions' infrastructure development delivery in Nigeria.

The study data were collated via face-to-face interviews and observation of existing buildings. From the six geo-political zones, two higher institutions each were selected for a good representation across Nigeria. Saturation was achieved with 26 participants interviewed. The emerged three main themes were analysed via thematic analysis.

Findings show inadequate infrastructure development in Nigerian higher institutions. Lack of policy and institutional framework, lax governance, level of transparency, and corruption, emerged as the key issues that may hinder private organisations from participating in public higher institutions infrastructure development delivery in Nigeria via ECSR. Others are lack of autonomy, inadequate planning, high level of impunity, political affiliation, poor management, and access to funding. The study proffers some recommendations based on these findings.

This research is restricted to the role of private organisations via ECSR in infrastructure development (buildings) in Nigeria's public higher institutions. Future study is needed to validate the proposed ECSR framework in developing countries for the provision of buildings for higher institutions in their host communities.

The paper will advance the philosophy of corporate social responsibility to the provision of building facilities in host communities' higher institutions by private companies through tax relief and supported by a proposed Presidential Executive Order.

The proposed ECSR framework can be used to improve building facilities in Nigeria's higher institutions. This may assist and stir up policymakers to explore the proposed model and back up with an established policy such as infrastructure tax relief (ITR) for implementation.

The study investigates the influence of financial transparency on citizens' trust and revenue paying behaviour of citizens of local governments in sub-Saharan Africa. It relies on the theories of stewardship and public choice in explaining the relationship between financial transparency, trust and willingness to pay.

The study applied a Partial Least Square Structural Equation Model (PLS-SEM) to survey data of 404 respondents selected from four Metropolitan and Municipal Assemblies of Ghana to test the hypotheses of the study.

It establishes the fact that financial transparency positively influences trust of citizens in local government and their willingness to pay taxes and levies. The study also found that both financial transparency and trust are low in the local governments of Ghana.

The study emphasises the importance of financial transparency in improving trust and willingness to pay. Thus, local governments are encouraged to seek innovative ways to enhance the quality and access to financial information by the citizens.

While prior studies focus on the measurement and determinant of financial transparency, this study links financial transparency to revenue mobilisation in the local government of sub-Saharan Africa.

There is still an ongoing debate on the value relevance of capital structure and its determinants. Recently the issue has been explored in family firms after being explored in mature firms. This paper investigates the role of institutional investors and the firm's innovation activity in influencing the firm's decision and ability to acquire debt capital.

A large sample of 700 privately-held family firms in Italy from 2010 to 2019. Two analysis techniques are used: panel analysis and path analysis. The value of debt and the debt ratio are used as leverage measures. The value of patent (as a proxy for innovation) and institutional investor are the explanatory variables.

The results show that institutional investors have no relationship with financial leverage measures except when controlling for an interaction variable (Institutional investors × Lombardy region). The patent value is positively correlated with debt; however, the ratio patent-to-asset is negatively related to financial leverage indicating higher risk exposure. The nonlinearity test demonstrates a turning point when the relationship between patent value and debt inverts.

Firms should monitor their innovation activity since excessive innovation increases risk exposure and affects financing opportunities and value. The involvement of institutional investors does not always enhance value.

Existing literature focuses separately on family firm innovations and financial leverage as outcome variables, emphasizing the role of institutional investors in both fields by adopting agency theory and socioemotional wealth framework. In this study, the authors go further by merging both relationships, investigating the dynamics of the institutional-family firm innovation relationship in influencing the firm's capital structure. The authors contribute to the ongoing debate by providing original findings on capital structure, governance and innovation, supported by rigorous methods to enhance family firms' decision-making.

The goal of this paper is twofold. First, to examine the role of expectations in shaping agents' behaviour within an extended time frame which incorporates a prolonged harsh downturn of economic activity. Therefore, the authors allow for an indirect impact of economy-wide expectations operating via their coexistence with firms' balance sheet factors. Second, it is tested whether the behaviour of listed firms as regards to debt follows the pecking order theory.

The authors use the panel data methodology in the estimation of the financial structure models since unobservable heterogeneity is an important determinant towards the target leverage. A fixed effects estimation procedure, with robust intercepts allowed to vary across firms, was employed to examine the relationship between leverage and performance.

The findings offer evidence of patterns of pecking order behaviour and thus for the necessity of internal financing over external debt. The authors also extended the set of determinants by investigating the effect of macroeconomic conditions on the debt decision of firms. Contrary to the authors’ expectations, short-run beliefs of economic agents appear to play a negative role in leverage.

This paper contributes to the literature in a number of ways. First, following the growing literature of loan dynamics, the findings provide useful insights into corporate capital structure decisions in an economy in which businesses were almost excluded from external financing for over a decade. Second, in order to better understand corporate financing decisions, it is necessary to consider the overall economic framework in which companies and especially the listed ones operate.

This study aims to determine the status and conditions of small and medium enterprises (SMEs) as predictors in empowering the rural communities of Samar Island, Philippines. Specifically, it aimed to describe SMEs’ organizational variables, and assess their conditions in terms of membership/ownership structure; leadership; policies, systems and procedures; resource mobilization; linkages and networking; communication systems; and awards and recognition; determine the level of empowerment of rural communities with SMEs along the aspects of material, perceptual and relational changes; and find out whether significant relationship exist between the organizational variables and the level of empowerment.

The study is a descriptive survey that utilized structured survey questionnaires, personal interviews and dialogues with the respondents in the actual data collection. The survey involved 18 SMEs from the rural communities of the 12 municipalities from the 3 provinces of Samar Island, as study samples – 6 coming from each province with 2 SMEs in every sub-sector of trading, manufacturing and services. Out of 270 respondents, 256 (94.81 per cent) responded. All statistics were computed using the SPSS computer software.

The organizational variables of the SMEs such as membership and ownership structure, leadership, policies, systems and procedures, resource mobilization, linkages and networking, communication systems and awards and recognition were assessed to be all “good” and were found to have significant relationship with the level of empowerment of rural communities with SMEs.

The rural communities with SMEs were empowered along the aspects of material, perceptual and relational changes. The result of the study indicated that through SMEs, rural people experienced changes in their lives. The test about the relationship of the organizational variables such as nature and ownership of business enterprise, leadership, policies, systems and procedures, resource mobilization, linkages and networking, communication systems and awards and recognition and the level of empowerment of rural communities as determined by changes in the material, perceptual and relational aspects of rural life proved to have significant relationships.