Title: The capital structure choices of agro-food firms: evidence from Italian SMEs

Authors: Matteo Rossi; Rosa Lombardi; Fabio Nappo; Raffaele Trequattrini

Addresses: DEMM Department, University of Sannio, Via delle Puglie, 82, 82100 Benevento, Italy ' Link Campus University, Rome, Italy ' Department of Economics and Law, University of Cassino and Southern Lazio, Cassino (FR), Italy ' Department of Economics and Law, University of Cassino and Southern Lazio, Cassino (FR), Italy

Abstract: The theme of capital structure has always been of great interest in the debate between scholars in the business research field. The aim of this paper is to test the application of the different financing theories in explaining the capital structure choice of 82 Small and Medium Enterprises (SMEs) within the Italian agro-food industry. The results show that the financing decisions in these firms could be explained through the main capital structure theories: Pecking Order Theory (POT), Trade-off Theory and Fiscal Theory. In agreement with POT, our results confirm an approach comprising an initial check on availability of internal resources, followed by the use of external capital (particularly bank debt). The research questions of this paper are the following: How do companies finance themselves? What are the mains factors that influence a firm's financing decisions?

Keywords: capital structure; firm behaviour; pecking order theory; trade-off theory; agro-food industry; SMEs; small and medium-sized enterprises; financial choices; agribusiness; Italy; fiscal theory; internal resources; external capital; bank debt; SME financing; finance decisions.

DOI: 10.1504/IJMP.2015.072768

International Journal of Management Practice, 2015 Vol.8 No.3, pp.172 - 186

Received: 12 Feb 2015
Accepted: 01 Jun 2015

Published online: 28 Oct 2015 *

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