An empirical investigation of the financial growth lifecycle

Abstract

Purpose – This paper aims to empirically examine the financing of small and medium sized enterprises (SMEs) through a financial growth lifecycle model.Design/methodology/approach – Data in publicly available databases are generally unsuitable to examine the financial lifecycle model, thus a questionnaire survey was employed to collect data. Because of the well‐documented reticence of SME owners to reveal detailed financial information, data were requested in percentage form. This innovative methodology was successful, as 92 per cent of respondents disclosed detailed financing data. A response rate of 42.6 per cent across six industry sectors provided data to employ parametric techniques. Reporting and analysing the large primary data set across six age categories, a number of statistical tests were conducted to test the financial growth lifecycle model.Findings – Analysis of respondents' capital structures across age groups indicates distinct changes in sources of finance employed by firms over time. Fina...