Testing the capital structure of Portuguese family businesses

Pestana, Luciana J.; Gomes, Luís Pereira; Lopes, Cristina

doi:10.1590/1808-057x202113190

Luciana J. Pestana

Acertotal - Consultoria de Condomínios, Lda, Departamento Financeiro, Funchal, Portugal

http://orcid.org/0000-0002-5388-6779

Luís Pereira Gomes

Instituto Politécnico do Porto, Instituto Superior de Contabilidade e Administração do Porto, São Mamede de Infesta, Portugal

Instituto Politécnico do Porto, Centro de Estudos Organizacionais e Sociais, São Mamede de Infesta, Portugal

http://orcid.org/0000-0001-9792-1049

Cristina Lopes

Instituto Politécnico do Porto, Instituto Superior de Contabilidade e Administração do Porto, São Mamede de Infesta, Portugal

Instituto Politécnico do Porto, Centro de Estudos Organizacionais e Sociais, São Mamede de Infesta, Portugal

http://orcid.org/0000-0002-4833-470X

Email:
lucianapestana_25@hotmail.com

Email:
pgomes@iscap.ipp.pt

Email:
cristinalopes@iscap.ipp.pt

Editor-in-Chief:

Fábio Frezatti

Associate Editor:

Fernanda Finotti Cordeiro

Correspondence address:

Luís Pereira Gomes. Instituto Politécnico do Porto, Instituto Superior de Contabilidade e Administração do Porto. Rua Jaime Lopes Amorim, s/n - 4465-004. São Mamede de Infesta - Portugal

Dependent variable	Notation	Proxy	Authors
Total debt ratio	D _it	$\frac{T o t a l L i a b i l i t i e s}{T o t a l A s s e t}$	Acedo-Ramírez et al. (2017Acedo-Ramirez, M., Ayala-Calvo, J., & Navarrete-Martinez, E. (2017). Determinants of capital structure: Family businesses vs non-family firms. Czech Journal of Economics and Finance, 67(2), 80-103.), Adair and Adaskou (2015Adair, P., & Adaskou, M. (2015). Trade-off-theory vs pecking order theory and the determinants of corporate leverage: Evidence from a panel data analysis upon French SMEs (2002-2010). Cogent Economics & Finance, 3(1), 1006477.), Caetano (2011Caetano, A. (2011). Decisões da estrutura de capitais das PME da Beira Interior: Teoria do trade-off vs teoria da pecking order [Master Thesis]. Universidade da Beira Interior.), Correia (2003Correia, T. (2003). Determinantes da estrutura de capital das empresas familiares portuguesas [Master Thesis]. Universidade do Algarve.), Gottardo and Moisello (2014Gottardo, P., & Moisello, A. (2014). The capital structure choices of family firms: Evidence from Italian medium-large unlisted firms. Managerial Finance, 40(3), 254-275.), López-Gracia and Sánchez-Andújar (2007López‐Gracia, J., & Sánchez‐Andújar, S. (2007). Financial structure of the family business: Evidence from a group of small Spanish firms. Family Business Review, 20(4), 269-287.), Mishra and McConaughy (1999Mishra, C., & McConaughy, D. (1999). Founding family control and capital structure: The risk of loss of control and the aversion to debt. Entrepreneurship Theory and Practice, 23(4), 53-53.), Serrasqueiro et al. (2016Serrasqueiro, Z., Nunes, P., & Silva, J. (2016). The influence of age and size on family-owned firms’ financing decisions: Empirical evidence using panel data. Long Range Planning, 49(6), 723-745.)
Short-term debt ratio	D _{it st}	$\frac{S h o r t t e r m L i a b i l i t i e s}{T o t a l A s s e t s}$	Serrasqueiro et al. (2012Serrasqueiro, Z., Nunes, P., & Silva, J. (2012). Are financing decisions of family-owned SMEs different? Empirical evidence using panel data. Journal of Management & Organization, 18(3), 363-382.), Thanh and Huong (2017Thanh, L. T., & Huong, D. M. (2017). Determinants of capital structure: An empirical study on Vietnamese listed firms. Serbian Journal of Management, 12(1), 77-92.)
Natural logarithm of Debt-to-Equity ratio	D _{it ln}	$l n (\frac{T o t a l L i a b i l i t i e s}{E q u i t y})$	López-Gracia and Sogorb-Mira (2008López-Gracia, J., & Sogorb-Mira, F. (2008). Testing trade-off and pecking order theories financing SMEs. Small Business Economics, 31(2), 117-136.)

Independent variable	Notation	Proxy	Expected Sign	Authors
Effective tax rate	ETR	$\frac{I n c o m e T a x E x p e n s e s}{E B T}$	+	Caetano (2011Caetano, A. (2011). Decisões da estrutura de capitais das PME da Beira Interior: Teoria do trade-off vs teoria da pecking order [Master Thesis]. Universidade da Beira Interior.), López-Gracia and Sánchez-Andújar (2007López‐Gracia, J., & Sánchez‐Andújar, S. (2007). Financial structure of the family business: Evidence from a group of small Spanish firms. Family Business Review, 20(4), 269-287.), López-Gracia and Sogorb-Mira (2008López-Gracia, J., & Sogorb-Mira, F. (2008). Testing trade-off and pecking order theories financing SMEs. Small Business Economics, 31(2), 117-136.), Serrasqueiro and Caetano (2015Serrasqueiro, Z., & Caetano, A. (2015). Trade-off theory vs pecking order theory: Capital structure decisions in a peripheral region of Portugal. Journal of Business Economics and Management, 16(2), 445-466.), Serrasqueiro and Nunes (2010Serrasqueiro, Z., & Nunes, P. (2010). Are trade-off and pecking order theories mutually exclusive in explaining capital structure decisions? African Journal of Business Management, 4(11), 2216-2230.), Serrasqueiro et al. (2011Serrasqueiro, Z., Armada, M., & Nunes, P. (2011). Pecking order theory vs trade-off theory: Are service SMEs’ capital structure decisions different? Service Business, 5(4), 381-409., 2012Serrasqueiro, Z., Nunes, P., & Silva, J. (2012). Are financing decisions of family-owned SMEs different? Empirical evidence using panel data. Journal of Management & Organization, 18(3), 363-382., 2016Serrasqueiro, Z., Nunes, P., & Silva, J. (2016). The influence of age and size on family-owned firms’ financing decisions: Empirical evidence using panel data. Long Range Planning, 49(6), 723-745.), Sogorb-Mira and López-Gracia (2003Sogorb-Mira, F., & López-Gracia, J. (2003). Pecking order vs trade-off: An empirical approach to the small and medium enterprise capital structure [Working Paper]. Instituto Valenciano de Investigaciones Económicas.)
Non debt tax shields	NDTS (1)	$\frac{D e p r e c i a t i o n + A m o r t i z a t i o n}{T o t a l A s s e t s}$	-	Caetano (2011Caetano, A. (2011). Decisões da estrutura de capitais das PME da Beira Interior: Teoria do trade-off vs teoria da pecking order [Master Thesis]. Universidade da Beira Interior.), Dang (2005Dang, V. (2005). Testing the trade-off and pecking order theories: Some UK evidence [Working Paper]. Leeds University Business School.), Fama and French (2002Fama, E., & French, K. (2002). Testing trade-off and pecking order predictions about dividends and debt. The Review of Financial Studies Spring, 15(1), 1-33.), Keasey et al. (2015Keasey, K., Martinez, B., & Pindado, J. (2015). Young family firms: Financing decisions and the willingness to dilute control. Journal of Corporate Finance, 34(C), 47-63.), López-Gracia and Sánchez-Andújar (2007López‐Gracia, J., & Sánchez‐Andújar, S. (2007). Financial structure of the family business: Evidence from a group of small Spanish firms. Family Business Review, 20(4), 269-287.), López-Gracia and Sogorb-Mira (2008López-Gracia, J., & Sogorb-Mira, F. (2008). Testing trade-off and pecking order theories financing SMEs. Small Business Economics, 31(2), 117-136.), Serrasqueiro et al. (2012Serrasqueiro, Z., Nunes, P., & Silva, J. (2012). Are financing decisions of family-owned SMEs different? Empirical evidence using panel data. Journal of Management & Organization, 18(3), 363-382., 2016Serrasqueiro, Z., Nunes, P., & Silva, J. (2016). The influence of age and size on family-owned firms’ financing decisions: Empirical evidence using panel data. Long Range Planning, 49(6), 723-745.), Sogorb-Mira and López-Gracia (2003Sogorb-Mira, F., & López-Gracia, J. (2003). Pecking order vs trade-off: An empirical approach to the small and medium enterprise capital structure [Working Paper]. Instituto Valenciano de Investigaciones Económicas.)
	NDTS (2)	$\frac{D e p r e c i a t i o n + A m o r t i z a t i o n}{E B I T D A}$	-	Ramalho and Silva (2009Ramalho, J., & Silva, J. (2009). A two-part fractional regression model for the capital structure decision of micro, small, medium and large firms [Working Paper]. Universidade de Évora.)
	NDTS (3)	$\frac{E B I T - I n t e r e s t E x p e n s e s - I n c o m e T a x E x p e n s e s}{S a l e s}$	-	Vieira (2014Vieira, E. (2014). Capital structure determinants in the context of listed family firms. Journal of Economy, Business and Financing, 2(1), 12-25.)
	NDTS (4)	$\frac{D e p r e c i a t i o n + A m o r t i z a t i o n}{E B I T}$	-	Correia (2003Correia, T. (2003). Determinantes da estrutura de capital das empresas familiares portuguesas [Master Thesis]. Universidade do Algarve.)
Growth opportunities	GO (1)	$\frac{{T o t a l A s s e t s}_{t} - {T o t a l A s s e t s}_{t - 1}}{{T o t a l A s s e t s}_{t - 1}}$	-	Ramalho and Silva (2009Ramalho, J., & Silva, J. (2009). A two-part fractional regression model for the capital structure decision of micro, small, medium and large firms [Working Paper]. Universidade de Évora.), Serrasqueiro et al. (2011Serrasqueiro, Z., Armada, M., & Nunes, P. (2011). Pecking order theory vs trade-off theory: Are service SMEs’ capital structure decisions different? Service Business, 5(4), 381-409., 2012Serrasqueiro, Z., Nunes, P., & Silva, J. (2012). Are financing decisions of family-owned SMEs different? Empirical evidence using panel data. Journal of Management & Organization, 18(3), 363-382.), Thanh and Huong (2017Thanh, L. T., & Huong, D. M. (2017). Determinants of capital structure: An empirical study on Vietnamese listed firms. Serbian Journal of Management, 12(1), 77-92.), Tong and Green (2005Tong, G., & Green, C. (2005). Pecking order or trade-off hypothesis? Evidence on the capital structure of Chinese companies. Applied Economics, 37(19), 2179-2189.),
	GO (2)	$\frac{I n t a n g i b l e A s s e t s}{T o t a l A s s e t}$	-	Acedo-Ramírez et al. (2017Acedo-Ramirez, M., Ayala-Calvo, J., & Navarrete-Martinez, E. (2017). Determinants of capital structure: Family businesses vs non-family firms. Czech Journal of Economics and Finance, 67(2), 80-103.), Adair and Adaskou (2015Adair, P., & Adaskou, M. (2015). Trade-off-theory vs pecking order theory and the determinants of corporate leverage: Evidence from a panel data analysis upon French SMEs (2002-2010). Cogent Economics & Finance, 3(1), 1006477.), Caetano (2011Caetano, A. (2011). Decisões da estrutura de capitais das PME da Beira Interior: Teoria do trade-off vs teoria da pecking order [Master Thesis]. Universidade da Beira Interior.), Sogorb-Mira and López-Gracia (2003Sogorb-Mira, F., & López-Gracia, J. (2003). Pecking order vs trade-off: An empirical approach to the small and medium enterprise capital structure [Working Paper]. Instituto Valenciano de Investigaciones Económicas.)
	GO (3)	$\frac{{S a l e s}_{t} - {S a l e s}_{t - 1}}{{S a l e s}_{t - 1}}$	-	López-Gracia and Sánchez-Andújar (2007López‐Gracia, J., & Sánchez‐Andújar, S. (2007). Financial structure of the family business: Evidence from a group of small Spanish firms. Family Business Review, 20(4), 269-287.), López-Gracia and Sogorb-Mira (2008López-Gracia, J., & Sogorb-Mira, F. (2008). Testing trade-off and pecking order theories financing SMEs. Small Business Economics, 31(2), 117-136.)
	GO (4)	$\frac{{N e t P r o f i t}_{t} - {N e t P r o f i t}_{t - 1}}{{N e t P r o f i t}_{t - 1}}$	-	Setia-Atmaja et al. (2009Setia‐Atmaja, L., Tanewski, G., & Skully, M. (2009). The role of dividends, debt and board structure in the governance of family controlled firms. Journal of Business Finance & Accounting, 36(7‐8), 863-898.)
Profitability	PROF (1)	$\frac{E B I T}{T o t a l A s s e t s}$	+	Dang (2005Dang, V. (2005). Testing the trade-off and pecking order theories: Some UK evidence [Working Paper]. Leeds University Business School.), Fama and French (2002Fama, E., & French, K. (2002). Testing trade-off and pecking order predictions about dividends and debt. The Review of Financial Studies Spring, 15(1), 1-33.), López-Gracia and Sánchez-Andújar (2007López‐Gracia, J., & Sánchez‐Andújar, S. (2007). Financial structure of the family business: Evidence from a group of small Spanish firms. Family Business Review, 20(4), 269-287.), López-Gracia and Sogorb-Mira (2008López-Gracia, J., & Sogorb-Mira, F. (2008). Testing trade-off and pecking order theories financing SMEs. Small Business Economics, 31(2), 117-136.), Ramalho and Silva (2009Ramalho, J., & Silva, J. (2009). A two-part fractional regression model for the capital structure decision of micro, small, medium and large firms [Working Paper]. Universidade de Évora.), Serrasqueiro and Caetano (2015Serrasqueiro, Z., & Caetano, A. (2015). Trade-off theory vs pecking order theory: Capital structure decisions in a peripheral region of Portugal. Journal of Business Economics and Management, 16(2), 445-466.), Serrasqueiro et al. (2011Serrasqueiro, Z., Armada, M., & Nunes, P. (2011). Pecking order theory vs trade-off theory: Are service SMEs’ capital structure decisions different? Service Business, 5(4), 381-409., 2012Serrasqueiro, Z., Nunes, P., & Silva, J. (2012). Are financing decisions of family-owned SMEs different? Empirical evidence using panel data. Journal of Management & Organization, 18(3), 363-382., 2016Serrasqueiro, Z., Nunes, P., & Silva, J. (2016). The influence of age and size on family-owned firms’ financing decisions: Empirical evidence using panel data. Long Range Planning, 49(6), 723-745.), Sogorb-Mira and López-Gracia (2003Sogorb-Mira, F., & López-Gracia, J. (2003). Pecking order vs trade-off: An empirical approach to the small and medium enterprise capital structure [Working Paper]. Instituto Valenciano de Investigaciones Económicas.), Vieira (2014Vieira, E. (2014). Capital structure determinants in the context of listed family firms. Journal of Economy, Business and Financing, 2(1), 12-25.)
	PROF (2)	$\frac{E B T}{T o t a l A s s e t s}$	+	Thanh and Huong (2017Thanh, L. T., & Huong, D. M. (2017). Determinants of capital structure: An empirical study on Vietnamese listed firms. Serbian Journal of Management, 12(1), 77-92.)
	PROF (3)	$\frac{E B I T}{S a l e s}$	+	Rita (2011Rita, R. (2011). Impacto da propriedade familiar do capital no processo de decisão de financiamento das empresas portuguesas [Doctoral Thesis]. Universidade de Évora.), Serrasqueiro et al. (2016Serrasqueiro, Z., Nunes, P., & Silva, J. (2016). The influence of age and size on family-owned firms’ financing decisions: Empirical evidence using panel data. Long Range Planning, 49(6), 723-745.)
	PROF (4)	$\frac{E B I T D A}{T o t a l A s s e t s}$	+	Ampenberger et al. (2013Ampenberger, M., Schmid, T., Achleitner, A., & Kaserer, C. (2013). Capital structure decisions in family firms: Empirical evidence from a bank-based economy. Review of Managerial Science, 7(3), 247-275.)
	PROF (5)	$\frac{N e t P r o f i t}{T o t a l A s s e t}$	+	Correia (2003Correia, T. (2003). Determinantes da estrutura de capital das empresas familiares portuguesas [Master Thesis]. Universidade do Algarve.)
Size	SIZE (1)	ln(Sales)	+	Gottardo and Moisello (2014Gottardo, P., & Moisello, A. (2014). The capital structure choices of family firms: Evidence from Italian medium-large unlisted firms. Managerial Finance, 40(3), 254-275.), López-Gracia and Sánchez-Andújar (2007López‐Gracia, J., & Sánchez‐Andújar, S. (2007). Financial structure of the family business: Evidence from a group of small Spanish firms. Family Business Review, 20(4), 269-287.), Ramalho and Silva (2009Ramalho, J., & Silva, J. (2009). A two-part fractional regression model for the capital structure decision of micro, small, medium and large firms [Working Paper]. Universidade de Évora.), Rita (2011Rita, R. (2011). Impacto da propriedade familiar do capital no processo de decisão de financiamento das empresas portuguesas [Doctoral Thesis]. Universidade de Évora.), Serrasqueiro and Caetano (2015Serrasqueiro, Z., & Caetano, A. (2015). Trade-off theory vs pecking order theory: Capital structure decisions in a peripheral region of Portugal. Journal of Business Economics and Management, 16(2), 445-466.), Serrasqueiro et al. (2016Serrasqueiro, Z., Nunes, P., & Silva, J. (2016). The influence of age and size on family-owned firms’ financing decisions: Empirical evidence using panel data. Long Range Planning, 49(6), 723-745.), Silva (2012Silva, S. (2012). Estrutura de capitais: Teste às teorias do trade-off vs pecking order [Master Thesis]. Universidade do Minho.)
Size	SIZE (2)	ln(Total Assets)	+	Dang (2005Dang, V. (2005). Testing the trade-off and pecking order theories: Some UK evidence [Working Paper]. Leeds University Business School.), Fama and French (2002Fama, E., & French, K. (2002). Testing trade-off and pecking order predictions about dividends and debt. The Review of Financial Studies Spring, 15(1), 1-33.), Gottardo and Moisello (2014Gottardo, P., & Moisello, A. (2014). The capital structure choices of family firms: Evidence from Italian medium-large unlisted firms. Managerial Finance, 40(3), 254-275.), Keasey et al. (2015Keasey, K., Martinez, B., & Pindado, J. (2015). Young family firms: Financing decisions and the willingness to dilute control. Journal of Corporate Finance, 34(C), 47-63.), López-Gracia and Sogorb-Mira (2008López-Gracia, J., & Sogorb-Mira, F. (2008). Testing trade-off and pecking order theories financing SMEs. Small Business Economics, 31(2), 117-136.), Serrasqueiro et al. (2011Serrasqueiro, Z., Armada, M., & Nunes, P. (2011). Pecking order theory vs trade-off theory: Are service SMEs’ capital structure decisions different? Service Business, 5(4), 381-409., 2016Serrasqueiro, Z., Nunes, P., & Silva, J. (2016). The influence of age and size on family-owned firms’ financing decisions: Empirical evidence using panel data. Long Range Planning, 49(6), 723-745.), Setia-Atmaja et al. (2009Setia‐Atmaja, L., Tanewski, G., & Skully, M. (2009). The role of dividends, debt and board structure in the governance of family controlled firms. Journal of Business Finance & Accounting, 36(7‐8), 863-898.), Silva (2012Silva, S. (2012). Estrutura de capitais: Teste às teorias do trade-off vs pecking order [Master Thesis]. Universidade do Minho.), Sogorb-Mira and López-Gracia (2003Sogorb-Mira, F., & López-Gracia, J. (2003). Pecking order vs trade-off: An empirical approach to the small and medium enterprise capital structure [Working Paper]. Instituto Valenciano de Investigaciones Económicas.), Thanh and Huong (2017Thanh, L. T., & Huong, D. M. (2017). Determinants of capital structure: An empirical study on Vietnamese listed firms. Serbian Journal of Management, 12(1), 77-92.)
Age	AGE (1)	ln(number of years of life)	+/-	Acedo-Ramírez et al. (2017Acedo-Ramirez, M., Ayala-Calvo, J., & Navarrete-Martinez, E. (2017). Determinants of capital structure: Family businesses vs non-family firms. Czech Journal of Economics and Finance, 67(2), 80-103.), Ampenberger et al. (2013Ampenberger, M., Schmid, T., Achleitner, A., & Kaserer, C. (2013). Capital structure decisions in family firms: Empirical evidence from a bank-based economy. Review of Managerial Science, 7(3), 247-275.), Keasey et al. (2015Keasey, K., Martinez, B., & Pindado, J. (2015). Young family firms: Financing decisions and the willingness to dilute control. Journal of Corporate Finance, 34(C), 47-63.), López-Gracia and Sánchez-Andújar (2007López‐Gracia, J., & Sánchez‐Andújar, S. (2007). Financial structure of the family business: Evidence from a group of small Spanish firms. Family Business Review, 20(4), 269-287.), López-Gracia and Sogorb-Mira (2008López-Gracia, J., & Sogorb-Mira, F. (2008). Testing trade-off and pecking order theories financing SMEs. Small Business Economics, 31(2), 117-136.), Serrasqueiro et al. (2016Serrasqueiro, Z., Nunes, P., & Silva, J. (2016). The influence of age and size on family-owned firms’ financing decisions: Empirical evidence using panel data. Long Range Planning, 49(6), 723-745.), Setia-Atmaja et al. (2009Setia‐Atmaja, L., Tanewski, G., & Skully, M. (2009). The role of dividends, debt and board structure in the governance of family controlled firms. Journal of Business Finance & Accounting, 36(7‐8), 863-898.), Sogorb-Mira and López-Gracia (2003Sogorb-Mira, F., & López-Gracia, J. (2003). Pecking order vs trade-off: An empirical approach to the small and medium enterprise capital structure [Working Paper]. Instituto Valenciano de Investigaciones Económicas.), Vieira (2014Vieira, E. (2014). Capital structure determinants in the context of listed family firms. Journal of Economy, Business and Financing, 2(1), 12-25.)
Age	AGE (2)	number of years of life	+/-	Adair and Adaskou (2015Adair, P., & Adaskou, M. (2015). Trade-off-theory vs pecking order theory and the determinants of corporate leverage: Evidence from a panel data analysis upon French SMEs (2002-2010). Cogent Economics & Finance, 3(1), 1006477.), Croci et al. (2011Croci, E., Doukas, J., & Gonenc, H. (2011). Family control and financing decisions. European Financial Management, 17(5), 860-897.), Ramalho and Silva (2009Ramalho, J., & Silva, J. (2009). A two-part fractional regression model for the capital structure decision of micro, small, medium and large firms [Working Paper]. Universidade de Évora.)
Assets tangibility	TANG (1)	$\frac{F i x e d A s s e t s}{T o t a l A s s e t s}$	+	Correia (2003Correia, T. (2003). Determinantes da estrutura de capital das empresas familiares portuguesas [Master Thesis]. Universidade do Algarve.), Croci et al. (2011Croci, E., Doukas, J., & Gonenc, H. (2011). Family control and financing decisions. European Financial Management, 17(5), 860-897.), Dang (2005Dang, V. (2005). Testing the trade-off and pecking order theories: Some UK evidence [Working Paper]. Leeds University Business School.), Ellul (2008Ellul, A. (2008). Control motivations and capital structure decision [Working Paper]. Indiana University.), Gottardo and Moisello (2014Gottardo, P., & Moisello, A. (2014). The capital structure choices of family firms: Evidence from Italian medium-large unlisted firms. Managerial Finance, 40(3), 254-275.), Mishra and McConaughy (1999Mishra, C., & McConaughy, D. (1999). Founding family control and capital structure: The risk of loss of control and the aversion to debt. Entrepreneurship Theory and Practice, 23(4), 53-53.), Serrasqueiro and Caetano (2015Serrasqueiro, Z., & Caetano, A. (2015). Trade-off theory vs pecking order theory: Capital structure decisions in a peripheral region of Portugal. Journal of Business Economics and Management, 16(2), 445-466.), Serrasqueiro et al. (2012Serrasqueiro, Z., Nunes, P., & Silva, J. (2012). Are financing decisions of family-owned SMEs different? Empirical evidence using panel data. Journal of Management & Organization, 18(3), 363-382., 2016Serrasqueiro, Z., Nunes, P., & Silva, J. (2016). The influence of age and size on family-owned firms’ financing decisions: Empirical evidence using panel data. Long Range Planning, 49(6), 723-745.), Setia-Atmaja et al. (2009Setia‐Atmaja, L., Tanewski, G., & Skully, M. (2009). The role of dividends, debt and board structure in the governance of family controlled firms. Journal of Business Finance & Accounting, 36(7‐8), 863-898.), Thanh and Huong (2017Thanh, L. T., & Huong, D. M. (2017). Determinants of capital structure: An empirical study on Vietnamese listed firms. Serbian Journal of Management, 12(1), 77-92.)
Assets tangibility	TANG (2)	$\frac{F i x e d A s s e t s + I n v e n t o r i e s}{T o t a l A s s e t s}$	+	Adair and Adaskou (2015Adair, P., & Adaskou, M. (2015). Trade-off-theory vs pecking order theory and the determinants of corporate leverage: Evidence from a panel data analysis upon French SMEs (2002-2010). Cogent Economics & Finance, 3(1), 1006477.), Ramalho and Silva (2009Ramalho, J., & Silva, J. (2009). A two-part fractional regression model for the capital structure decision of micro, small, medium and large firms [Working Paper]. Universidade de Évora.), Sogorb-Mira and López-Gracia (2003Sogorb-Mira, F., & López-Gracia, J. (2003). Pecking order vs trade-off: An empirical approach to the small and medium enterprise capital structure [Working Paper]. Instituto Valenciano de Investigaciones Económicas.)
Cash flow	CF (1)	$\frac{E B I T + D e p r e c i a t i o n + A m o r t i z a t i o n}{T o t a l A s s e t s}$	-	López-Gracia and Sánchez-Andújar (2007López‐Gracia, J., & Sánchez‐Andújar, S. (2007). Financial structure of the family business: Evidence from a group of small Spanish firms. Family Business Review, 20(4), 269-287.)
	CF (2)	$\frac{E B I T + D e p r e c i a t i o n + A m o r t i z a t i o n}{F i x e d A s s e t s}$	-	Sogorb-Mira and López-Gracia (2003Sogorb-Mira, F., & López-Gracia, J. (2003). Pecking order vs trade-off: An empirical approach to the small and medium enterprise capital structure [Working Paper]. Instituto Valenciano de Investigaciones Económicas.)
	CF (3)	$\frac{N e t P r o f i t + D e p r e c i a t i o n + A m o r t i z a t i o n}{T o t a l A s s e t s}$	-	Keasey et al. (2015Keasey, K., Martinez, B., & Pindado, J. (2015). Young family firms: Financing decisions and the willingness to dilute control. Journal of Corporate Finance, 34(C), 47-63.), Serrasqueiro et al. (2011Serrasqueiro, Z., Armada, M., & Nunes, P. (2011). Pecking order theory vs trade-off theory: Are service SMEs’ capital structure decisions different? Service Business, 5(4), 381-409.),
	CF (4)	Net Profit + Depreciation + Amortization	-	López-Gracia and Sogorb-Mira (2008López-Gracia, J., & Sogorb-Mira, F. (2008). Testing trade-off and pecking order theories financing SMEs. Small Business Economics, 31(2), 117-136.)
	CF (5)	$\frac{E B I T + (D e p r e c i a t i o n + A m o r t i z . + P r o v i s i o n s)}{T o t a l A s s e t s}$	-	Acedo-Ramírez et al. (2017Acedo-Ramirez, M., Ayala-Calvo, J., & Navarrete-Martinez, E. (2017). Determinants of capital structure: Family businesses vs non-family firms. Czech Journal of Economics and Finance, 67(2), 80-103.)
Relationship between growth opportunities and cash flow	HGOLCF and LGOHCF	Conditional Dummy Variables	+ -	López-Gracia and Sánchez-Andújar (2007López‐Gracia, J., & Sánchez‐Andújar, S. (2007). Financial structure of the family business: Evidence from a group of small Spanish firms. Family Business Review, 20(4), 269-287.), López-Gracia and Sogorb-Mira (2008López-Gracia, J., & Sogorb-Mira, F. (2008). Testing trade-off and pecking order theories financing SMEs. Small Business Economics, 31(2), 117-136.), Serrasqueiro et al. (2011Serrasqueiro, Z., Armada, M., & Nunes, P. (2011). Pecking order theory vs trade-off theory: Are service SMEs’ capital structure decisions different? Service Business, 5(4), 381-409.)

Restrictions	Sample (n. companies)
Portuguese companies	605,724
Active companies	332,874
Corporations and limited liability companies	330,345
Non-financial corporations	319,138
Individual or family controls more than 50% of the property	284,188
Present accounts for the period 2009-2016	57,936
Positive equity	39,713
Small, medium, and large family businesses	4,952

Variable	Notation	Mean	Standard deviation	Minimum	Maximum
Total debt ratio	D_it	0.553	0.2272	0	2.9982
Short-term debt ratio	D_{it st}	0.4161	0.2149	0	2.35
Natural logarithm of debt-to-equity ratio	D_{it ln}	0.2392	1.1408	-8.0889	9.0037
	ΔD_it	-0.0159	0.1043	-2.6693	2.9241
	ΔD_{it st}	-0.0145	0.1408	-1.5003	1.6395
	ΔD_{it ln}	-0.0696	0.4337	-7.6658	9.4695
Financial deficit	FD	-0.0027	0.2938	-35.9465	26.4694
Effective tax rate	ETR	0.3223	3.5902	-106.6051	362.4484
Non debt tax shields	NDTS (1)	0.0381	0.0376	-0.1781	0.8075
Growth opportunities	GO (1)	0.0481	0.3299	-0.8622	49.8082
Growth opportunities	GO (2)	0.0102	0.0625	-0.0074	0.9198
Profitability	PROF (2)	0.0463	0.0822	-3.1495	0.9055
Size	SIZE (1)	7.5911	0.9978	-0.0174	13.6302
Age	AGE (1)	2.967	0.6127	0	4.727
Assets tangibility	TANG (1)	0.2478	0.2103	0	1.0211
Assets tangibility	TANG (2)	0.4196	0.2402	0	1.1197
Cash flow	CF (3)	0.0716	0.0859	-3.1710	4.7425
Relationship between growth opportunities and cash flow	HGOLCF	0.0433	0.2917	0	49.8082
Relationship between growth opportunities and cash flow	LGOHCF	-0.0126	0.0507	-0.7857	0.0846

Independent variables	Dependent variables
Independent variables	D_it	D_{it st}	D_{it ln}
D _it-1	0.5166***
D _{it-1 st}		0.4824***
D _{it-1 ln}			0.8137***
λ	0.4834***	0.5176***	0.1863***
ETR	-0.00004	-0.00002	-0.0007
NDTS (1)	0.2249***	0.2071***	0.2335***
GO (1)	0.1022***		0.6727***
GO (2)		-0.1226***
PROF (2)	-0.6016***	-0.3832***	-2.3287***
SIZE (1)	0.0387***	0.0360***	0.0293***
AGE (1)	-0.0164***	-0.0142***	-0.0552***
TANG (1)		-0.0665***
TANG (2)	0.0591***		-0.0049
Hansen	1,091.01***	702.41***	293.78***
m₁	-10.15***	-15.06***	-11.05***
m₂	9.93***	8.10***	6.96***
Wald (χ²)	174.272***	92,636.79***	22,967.57***
N. obs.	39,616	39,616	39,616

Independent variables	Expected relationship	Estimated relationship	Validation of hypotheses or relationship
λ	λ > 0	λ > 0	H₁:Validated
(1 - λ)	(1 - λ) > 0	(1 - λ) > 0	H_1.1: Validated
Agency costs			H_1.2:Validated
ETR	+	n.s.	Rel. not validated
NDTS	-	+	Rel. not validated
GO	-	+/-	Rel. not validated
PROF	+	-	Rel. not validated
SIZE	+	+	Rel. validated
AGE	+	-	Rel. not validated
TANG	+	+/-/n.s.	Rel. not validated

Independent variables	Dependent variables
Independent variables	ΔD_it	D_{it st}	ΔD_{it ln}
α	-0.0155***	-0.0146***	-0.0697***
FD	0.1614***	-0.0197***	-0.0100
R ²	0.0087	0.0017	0.00005
R ² _{Ad j}	0.0086	0.0017	0.00002
F	345.9***	67.23***	1.83
N. obs.	39,616	39,616	39,616

Independent variables	Dependent variable: D _it
Independent variables	OLS	Fixed effects	Random effects
α	0.81***	1.1101***	1.0225***
CF (3)	-0.5545***	-0.2750***	-0.288***
AGE (1)	-0.0747***	-0.1812***	-0.1514***
HGOLCF	0.0525***	0.0147	0.0164
LGOHCF	-0.1689***	0.0172	0.0110
R²	0.0778	0.1322	0.1127
R² _{Ad j}	0.0777	0.0082	0.1126
F	835.17***	1,320.52***	1,257.75***
LM (χ²)		89,119***
Hausman (χ²)		746.91***
N. obs.	39,616	39,616	39,616
	Dependent variable: D_{it st}
α	0.6255***	0.9430**	0.8026***
CF (3)	-0.3671***	-0.1525***	-0.1703***
AGE (1)	-0.0630***	-0.1740***	-0.1263***
HGOLCF	0.0390***	0.0126	0.0150
LGOHCF	-0.1677***	0.0116	0.0003
R²	0.0499	0.0746	0.0582
R² _{Ad j}	0.0498	-0.0577	0.0582
F	519.84***	698.31***	612.46***
LM (χ²)		64,717***
Hausman (χ²)		502.61***
N. obs.	39,616	39,616	39,616
	Dependent variable: D_{it ln}
α	1.5621***	3.2274**	2.7868***
CF (3)	-2.8087***	-1.4984***	-1.5499***
AGE (1)	-0.3847***	-0.9708***	-0.8213***
HGOLCF	0.2765***	0.0968	0.1044
LGOHCF	-0.6279***	0.3452***	0.3162***
R²	0.0810	0.1650	0.1404
R² _{Ad j}	0.0809	0.0457	0.1403
F	873.1***	1,712.67***	1,617.65***
LM (χ²)		92,564***
Hausman (χ²)		947.23***
N. obs.	39,616	39,616	39,616

Independent variables	Expected relationship	Estimated relationship	Validation of hypotheses
α and b_PO	α = 0 and b_PO = 1	$α ≅ 0$ and $b_{P O} ≅ 0$	H₂: Not validated
CF	-	-	H_2a: Validated
AGE	-	-	H_2b: Validated
HGOLCF	+	n.s.	H_2c-1: Not validated
LGOHCF	-	n.s./+	H_2c-2: Not validated

Independent variables	Dependent variables
Independent variables	D_it	D_{it st}	D_{it ln}
D_it-1	0.5328***
D_{it-1 st}		0.4987***
D_{it-1 ln}			0.8248***
λ	0.4672***	0.5013***	0.1752***
FD	0.0001**	-0.0130**	-0.0172
ETR	-0.0001	-0.00004	-0.0007
NDTS (1)	0.2328***	0.2451***	0.4901
GO (1)	0.0910***		0.74***
GO (2)		-0.1182***
PROF (2)	-0.5546***	-0.3493***	-2.0405***
SIZE (1)	0.0369***	0.0334***	0.0273***
AGE (1)	-0.0154***	-0.0121***	-0.0503***
TANG (1)		-0.0649***
TANG (2)	0.0574***		-0.0087
CF (3)	-0.0455	-0.0168	-0.3981
HGOLCF	0.0449	0.0993***	-0.0745
LGOHCF	-0.1431***	-0.0438*	-0.3128***
Hansen	1,121.49***	713.41***	339.10***
m₁	-10.75***	-15.17***	-11.28***
m₂	10.17***	8.29***	6.95***
Wald (χ²)	193,010.20***	101,429.50***	24,376.30***
N. obs.	39,616	39,616	39,616

Independent variables	Expected relationship	Estimated relationship	Validation of hypotheses
λ and b_PO	$b_{P O} \neq 0$ and $λ \neq 0$	$b_{P O} \neq 0$ and $λ \neq 0$	H₃: Validated
λ and b_PO	λ > b_PO	λ > b_PO	H₄: Validated
λ and b_PO	b_PO > λ	λ > b_PO	H₅: Not validated

D_{i t} = δ D_{i t - 1} + β_{0} + β_{1} {E T R}_{i t} + β_{2} {N D T S}_{i t} + β_{3} {G O}_{i t} + β_{4} {P R O F}_{i t} + β_{5} {S I Z E}_{i t} + β_{6} {A G E}_{i t} + β_{7} {T A N G}_{i t} + θ_{i} + ε_{i t}

D_{i t} = α + δ D_{i t - 1} + b_{P O} {F D}_{i t} + β_{1} {E T R}_{i t} + β_{2} {N D T S}_{i t} + β_{3} {G O}_{i t} + β_{4} {P R O F}_{i t} + β_{5} {S I Z E}_{i t} + β_{6} {A G E}_{i t} + β_{7} {T A N G}_{i t} + β_{8} {C F}_{i t} + β_{9} {H G O L C F}_{i t} + β_{10} {L G O H C F}_{i t} + θ_{i} + ε_{i t}

[1] Email:
lucianapestana_25@hotmail.com

1	For companies that, at any given time, present simultaneously growth opportunities above the average of the total sample and cash flows below the average of the total sample.
0	Other situations.
1	For companies that, at any given time, exhibit simultaneously growth opportunities below the average of the total sample and cash flows above the average of the total sample.
0	Other situations.

Brasil

Brasil

Testing the capital structure of Portuguese family businesses^* * Work presented at the XVIII Encontro AECA (Asociación Española de Contabilidad y Administración de Empresas), September of 2018, Lisboa, Portugal.

ABSTRACT

Brasil

Brasil

Testing the capital structure of Portuguese family businesses* * Work presented at the XVIII Encontro AECA (Asociación Española de Contabilidad y Administración de Empresas), September of 2018, Lisboa, Portugal.

ABSTRACT

Testing the capital structure of Portuguese family businesses^* * Work presented at the XVIII Encontro AECA (Asociación Española de Contabilidad y Administración de Empresas), September of 2018, Lisboa, Portugal.