Vos

Bell & Vos , "The Happy Story Told by SME Capital Struture"

2010. A very unconventional approach.

Abstract: The determinants of SME capital structure are re-examined, motivated by the assertion that SMEs’

access to finance is not a binding constraint since most SMEs seek contentment (or, happiness) not

growth (Vos, et al (2007)). We argue that ‘contentment theory’ (or, the ‘happy story’), provides a

better theoretical and empirical description of SME capital structure behaviour than does pecking

order theory. Characteristic variables (eg. age, gender) help generate a sketch of an SME capital

structure life-cycle which is in sharp contrast to ‘finance gap’ presumptions (Berger and Udell (1998))

or informational asymmetry arguments (Myers and Majluf, (1984)).