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Bathala, Chenchuramaiah T.
Bowlin, Oswald D.
Dukes, William P.
Year of Publication: 
[Journal:] Journal of Entrepreneurial Finance, JEF [ISSN:] 1551-9570 [Volume:] 9 [Year:] 2004 [Issue:] 1 [Pages:] 29-52
In this paper we examine the relationship between ownership differences and small firms' financial policies using a survey of U.S. companies. The study finds that financial policies differ according to the type of ownership (private versus public) and by the ownership differences (family-owned, closely-held, or widely-held) within the private firms. The differences are in the ownership concentration, relative importance of various sources of capital, debt characteristics (sources of debt financing, debt maturity, and debt cost). A multiple regression equation estimated in the paper provides evidence relating to cross-sectional variations in debt ratios of small firms. The paper offers information asymmetry, illiquidity, and agency cost explanations for the observed differences in ownership and financial policies of small firms.
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