Small and micro enterprise owners' characteristics and their impact on capital structure

Abstract

Small and Medium Enterprises (SMEs) use different sources of financing some of thememerging to be a challenge to the performance of the SME since most SME owners lacknecessary knowledge on which sources of finance to enhance financial performance, one ofthe essential elements is financing. Businesses need finance for their expansion, production,innovation, growth and development. For SMEs to survive and grow, access to debt financeis critical. Owners’ characteristic is an important determinant of finance options among SME.The aim of this study was to determine the SME owners’ characteristics and their impact oncapital structure adopted. The research analyzed the effect of SME owners’ self efficacy oncapital structure, SME owners’ Overconfidence on capital structure and the effect SMEowners’ social network on capital structure. The study was informed by Human capitaltheory. Explanatory research design was adopted and the target was 295 SMEs which areregistered as companies within Thika town in Kenya. Stratified random sampling techniquewas used to select a sample size of 170 SMEs. Secondary data was collected from financialrecords of SMEs and structured questionnaires were used to collect primary data. Descriptivestatistics specifically mean and standard deviation, and inferential statistics such as Pearsoncorrelation coefficient and multiple regression model were used in data analysis. The studyfindings provide insight on the best components of capital structure that SMEs can employ toimprove their financial performance.

(1) (PDF) SMALL AND MICRO ENTERPRISE OWNERS' CHARACTERISTICS AND THEIR IMPACT ON CAPITAL STRUCTURE. Available from: https://www.researchgate.net/publication/299470532_SMALL_AND_MICRO_ENTERPRISE_OWNERS'_CHARACTERISTICS_AND_THEIR_IMPACT_ON_CAPITAL_STRUCTURE [accessed May 30 2024].