مقاله انگلیسی رایگان در مورد تامین مالی بدهی در شرکت های خصوصی و دولتی – اسپرینگر 2018

Introduction

The focus of the empirical capital structure literature is almost exclusively on publicly traded firms without shedding much light on the financial decisions of private firms. The scarce research on the capital structure of private firms is unfortunate since these firms represent most of the economy.1 Given that private firms are fundamentally different from public firms, we cannot draw reliable conclusions about private firms’ debt financing choices based on public firms’ financing choices. Towards this end, in this paper we answer the following questions: First, does a firm’s private/public status affect its choice of debt versus equity financing? Second, do private firms rely more on short-term debt? Third, do economic conditions influence differently debt financing choices of private and public firms? One notable difference between private and public firms is the level of information asymmetry between managers (insiders) and investors (outsiders). Due to the cost of asymmetric information, a firm follows a pecking-order rule regarding its financing sources: retained earnings to debt, short-term debt to long-term debt, and debt over equity.2 Because private firms are more opaque than public firms (the assessment of a firm’s risk profile is more difficult), the value of outside equity in private firms is more sensitive to information asymmetry than in public firms. As a result, private firms are likely to rely more (less) on debt (equity) financing than public firms. Similarly, private firms are expected to use more short-term debt than long-term debt, holding all else equal. Previous studies on corporate policies of private firms consider only the very large private firms, omitting the majority of small and medium size firms (e.g., Brav 2009; Saunders and Steffen 2011; Gao et al. 2013). Knowing that the cost of information asymmetry is more pronounced in smaller and medium-size private firms, the exclusion of these firms potentially renders an incomplete picture of the role of asymmetric information in debt financing of private firms. Using the entire population of Canadian firms allows us to circumvent potential sample selection biases typical for subsamples of firms. After controlling for standard capital structure determinants, our results show that the leverage of private firms is 12% higher than for public firms. In addition, based on the within-firm estimator, private firms’ leverage is 3% higher compared to public firms’ leverage, suggesting that unobserved firm heterogeneity drives a substantial portion of leverage choices, and hence the need to use firm fixed effects. Asymmetric information plays a role not only in financing choices (i.e., debt vs. equity) but in debt maturity as well. Private firms are expected to rely more on shortterm than on long-term debt because private firms would likely reap higher benefits of short-term debt by revisiting their creditors more frequently in order to gain from monitoring and consequently lower information asymmetry costs. Similarly, private firms with high information asymmetry are expected to issue short-term debt to avoid locking in their cost of financing with long-term debt if they expect to borrow at more favorable terms in the future (e.g., Diamond 1991; Barclay and Smith 1995). Our results show that after controlling for firm time-varying factors and unobserved firm heterogeneity, private firms rely more on short-term debt than public firms.