Capital structure determinants of Portuguese footwear sector SMEs

The
main objective of this paper is to study the capital structure
determinants of SMEs in the footwear industry and their indebtedness.
Using panel data methodology and considering a sample of 70 firms we
study the capital structure determinants between 2010 and 2013. The
paper examines the indebtedness level in light of the two main theories –
the Trade-off theory and the Pecking Order
theory and we chose the footwear sector because of its importance in
the Portuguese economy. In addition to total indebtedness we extend the
literature by analyzing the differences between short-term and long-term
indebtedness and the impact of the presence in foreign markets on debt
structure. The results suggest that profitability, growth, total
liquidity, risk and presence in foreign markets are key factors
affecting the capital structure of footwear firms and that Pecking Order theory seems more suited to those firms.