Capital structure determinants of hospitality sector SMEs

Journal article


Research Areas

Publication Details

Author list: Pacheco, L., Tavares, F.
Publisher: SAGE Publications (UK and US)
Publication year: 2017
Journal: Tourism Economics (1354-8166)
Volume number: 23
Issue number: 1
Start page: 113
End page: 132
Number of pages: 20
ISSN: 1354-8166
eISSN: 20440375
Languages: English-Great Britain (EN-GB)


The main objective of this article is to study the capital structure
determinants of small and medium enterprises (SMEs) in the hospitality
sector and how this can influence their level of indebtedness. Using
panel data methodology and considering a sample of 43 Portuguese hotels,
the authors study the capital structure determinants between 2004 and
2013. The study examines the indebtedness level in light of the two main
theories - the Trade-off theory and the Pecking Order theory. The
hospitality sector was chosen because of its importance in the
Portuguese economy and because this particular sector has hardly been
studied. In addition to total indebtedness, the authors extend the
literature by analysing the differences between short-term and long-term
indebtedness. The results obtained suggest that profitability, assets
tangibility, firm dimension, total liquidity and risk are key factors
affecting the capital structure of hospitality sector SMEs, while
growth, other tax benefits and age were not deemed relevant. These
results allow us to conclude that Trade-off and Pecking Order theories
should not be considered in isolation to explain the capital structure
of hospitality sector SMEs. © The Author(s) 2016.


Capital, Hospitality, Management, SMEs


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Last updated on 2019-13-08 at 00:45