Following recent literature on the specific
field of industry effects on capital structure determination (Kumar et al.,
2017; Daskalakis et al., 2022), the main purpose of this paper is to
reintroduce the importance of industry effects in the determination of
financial leverage, focusing on SMEs. In this paper, we investigate whether
SMEs capital structure is determined differently across different industries.
We construct a three-stage econometric model, built around industry
differentiations in capital structure determination, aiming to investigate the
following two aspects: a) the relationship between the debt ratio and specific
capital structure determinants, taking the industry factor under consideration,
b) any potential differentiation in capital structure determinants across the
selected industries. We not only show that the different capital structure
determinants affect financial leverage in different ways across industries
(different signs), but we also show that the level of intensity is different
(statistically different coefficients) even in case the signs are the same.
JEL classification numbers: G3, G32.
Capital Structure, Financial Leverage, Industry Effects, SMEs Financing,
Pecking Order Theory, Trade-off Theory.