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The purpose of this paper is to investigate whether the relationship between capital structure and firm performance in small- and medium-sized enterprises (SMEs) is moderated by credit risk.

The authors empirically test whether an SME’s credit risk affects the SME’s relationship between capital structure and firm performance by using a 2012 cross-sectional sample of European SMEs from Austria, Belgium, Finland, France, Germany, Italy, Portugal, Spain, Sweden and the UK.

The empirical results suggest that in low credit risk SMEs, the debt ratio is negatively related to firm performance; however, this relationship is not present in high credit risk SMEs. Therefore, it is indicated that SME credit risk moderates the relationship between capital structure and firm performance.

The findings of the paper will enable financial managers to understand the importance of SMEs’ credit risk and will assist them in maximizing firms’ performance.

This paper extends the findings of previous studies by examining whether credit risk affects the relationship between capital structure and firm performance.

The purpose of this paper is to investigate whether religion or national culture can explain previously observed cross-country variation in trade credit.

Using the firm-level SME data from 35 European countries, religion and cultural factors of Hofstede and Schwartz, the authors provide new evidence on the determinants of the cross-country variation in trade credit.

The results indicate that religion and national culture are associated with trade credit. The authors find that the levels of trade credit are higher in Catholic countries than in Protestant ones and that peoples’ religiousness has an impact on trade credit only in Catholic countries. The authors also find that Hofstede’s cultural dimensions, such as power distance and uncertainty avoidance, are positively associated with trade credit.

Overall, authors’ findings indicate that religion and national culture are important determinants of trade credit management, and that the association between commonly used cultural values and trade credit depends on the religious, legal, and financial environment.

To the best of authors’ knowledge, this is the first study to research the relationship between national culture and trade credit.

As the information asymmetry and credit rationing are existing, SMEs are finding it difficult to gain bank credit. Trade credit, as a one off substitution, gives another access to SME finance. The purpose of this paper is to examine the effects between inter‐corporate relationships (including the direct‐relationship and indirect‐relationship) and trade credit.

Following the mainstream of qualitative and quantitative research, this paper examines the relationship between SMEs and their analysis of the commercial credit financing. In the empirical research, through text‐analysis to build the variable of “the number of unions that enterprises take part in”. First, find the relate union through “baidu and googel” by the keywords of enterprise's name and the Union; then two persons select and determine which the enterprise may take part in and calculate the number. For that which cannot make sure, ask the third person. Learning from the HHI‐index, the paper calculates according to the amount and times of the enterprise related transactions to build the variable of “the concentration of enterprises related transactions”. Based on three years panel data (from 2007 to 2009) of 196 small and medium listed companies, this paper establishes the empirical models and examines the effects between inter‐corporate relationship and trade credit through the random effect model.

The paper finds that: SMEs must pay attention to inter‐enterprise relationship management. Without the power and status owned by large enterprises, SMEs have to learn how to survive in the complex and changing environment. The managers of SMEs have to develop their skills to manage the inter‐enterprise relationship. It finds the effects between inter‐enterprise relationship and trade credit seem like a “U” shape. SMEs should take part in associations wittingly and establish the relationship with the others, as all economic activities are embedded in the social network. This research shows that participating in the business associations, especially provincial associations, has a positive impact to gain trade credit.

This paper breaks through the traditional SMEs' financing theories. In this paper, the individual level theories have been extended to the organizational level. This paper also expands the study of the social capital theory and gives a more tolerable empirical test.

The purpose of this paper is to investigate whether or not auditor gender has an impact on the magnitude of corporate earnings management in small‐ and medium‐sized private Finnish firms.

The paper examines the association between auditor gender and earnings management of private firms by means of multiple linear regression analysis. In this analysis the paper uses discretionary accruals (DACC) estimated by using the cross‐sectional version of the Jones model as a measure for corporate earnings management.

When the absolute (unsigned) earnings management on gender and a set of control variables is regressed, it is found that female auditors allow for more discretion in income reporting. When the analysis is conducted separately for sub‐samples of income increasing and income decreasing DACC, the results suggest that female auditors are more conservative.

This study has been conducted by using data from one country. Since it is commonly known that the role of females in the society varies from one country to the next more research is needed in different social environments.

When selecting auditors, management should pay attention also to the gender of the auditor. It may also be useful for stakeholders to pay attention to the gender of the auditors that they engage or the gender distribution of the audit team.

The results imply that gender diversity in the auditing profession may improve the quality of financial statement overall.

This study is the first one that investigates the effect that auditor gender may have on actual earnings management behavior. It also adds to the understanding on earnings management in private firms.

The purpose of this paper is to investigate the impact of gender on the usage of different funding sources in a sample of Finnish small‐ to medium‐sized enterprises (SMEs). The aim is also to embed the results into the country‐context, which is characterized by the long history of women's economic activity and bank‐based capital markets.

The database includes variables on terms of credit for the firms' most recent loans and detailed information on the firms' banking relationships. The total number of firm‐year observations in the database is 3,519. The analysis is based on multivariate tests.

The funding patterns of women‐owned SMEs (WOS) and men‐owned SMEs (MOS) in the data are different: WOS are more likely to use additional equity investments by current owners as a funding source. They do so at least partly because of their positive attitudes towards this funding source. The results also contradict prior studies, which indicate that MOS have easier access to bank lending. The results suggest that there are no gender‐related differences in the use of bank debt. Also in contrast to prior studies, the paper finds no differences in firm size or profitability between WOS and MOS.

The results of study both confirm and contradict the results of prior research and the paper suggests that this is due to the context‐specific features of the Finnish labour market and the gender system as well as the bank‐centered financial markets.

Concerning the issues of gender and finance, policy makers and financial experts in any country should not uncritically rely on the research results arrived at in other countries.

Only a handful of studies have investigated issues of gender and finance in SMEs embedding the results into the country‐context.

The purpose of this paper is to investigate lender evaluations of start-up success in a sample of Finnish firms that are customers of a state-owned financial institution. The database allows the authors to examine how qualitative information, based on the personal history, firm-specific characteristics, subjective credit-analyst evaluations of business prospects, and market position impact firm performance.

The data for this study was collected in 2003 and 2005 from the database of Finnvera, a state-owned financial institution. The authors employed logistic regression in the analyses, using t-test analyses to describe the sample before developing the different models.

The results suggest that the lenders’ evaluations of the business prospects at the start are suitable predictors of good performance. However, the determinants of the actual firm performance (at t5) and business prospects (at t0) are, to some extent, different. The results confirm previous findings indicating that humans display fallibility because they have a tendency to overestimate less relevant cues and, conversely, underestimate the more relevant ones.

The study data includes only the customers of a state-owned financial institution; therefore, the results cannot be generalized across other financiers. Another constraint relates to the pre-selection bias, since this data excludes information on loan applicants who were rejected, which was not recorded in the lender’s files.

The findings of this study provide lenders (especially state-owned financiers), policy makers, and entrepreneurs with clearer guidance regarding the important aspects of a firm’s period of establishment. For lenders, this may provide a step toward improving the quality of judgments.

This paper is one of the few that sheds light on lender evaluations using non-accounting variables in order to examine their ability to predict firm performance, not failure, and to compare it with lenders’ evaluation. Another original contribution is that the data consists of the customers of a state-owned financial institution.

This paper aims to focus on economic consequences of audit outcomes by investigating the concept of audit quality operationalised as seven components of audit benefits to owner-managers of small companies.

The authors analyse survey data collected in 2013 from 642 small private companies above the audit exemption threshold in Finland.

No significant association was found between engagement of a Big 4 auditor (proxy for audit quality) and any of the audit benefits tested. However, the results provide consistent evidence of a positive relationship between the owner-manager’s perception of the competence and reliability of the external accountant and the perceived benefits of audit. It was also found that companies which do not incorporate e-processes in the accounting system are more likely to value the internal control benefits provided by audit.

Small business surveys suffer from poor response rates. To some extent, the authors overcame this problem by using two focused sampling frames and reminders. Care must be taken when generalising the results, as the definition of “small” varies across jurisdictions.

By focusing on small private companies, the research contributes to the audit quality literature. Contrary to studies of listed companies, the authors conclude that use of a Big 4 auditor is not a sufficient surrogate for audit quality in small companies. The authors go beyond aggregate measures of audit quality used in previous studies and identify specific audit benefits.

The purpose of this paper is to investigate the impact that ownership structure and board composition have on financial performance in a sample of Finnish small to medium‐sized enterprises (SMEs).

The data for this study were collected through a private survey. The financial data were collected from the Voitto+ register and observations were made from 2000 to 2005. The authors employ panel data estimation and 2SLS methods in their analyses.

Results suggest that the ownership structure affects both the growth and the profitability of small private firms. Firms with high managerial ownership levels exhibit higher profitability ratios but have lower growth rates. Firms with high venture capital firm ownership ratios are found to grow faster and are less profitable. The results on board structure suggest that board structure has little impact on the performance of small firms. The only significant result in this context is that firms with outside board members have lower growth rates and are less profitable.

The results of this study can be interpreted to indicate that owner‐managers are risk averse and that venture capital firms seek investments with high growth potential. The results could also imply that outsiders are taken on as board members in badly‐performing firms on financiers' requests, or because it is thought that they can enhance performance.

The paper is one of the few that shed light on how corporate governance and ownership structures affect the performance of small private firms.