The aim of this paper is to analyze the factors that motivate private firms to followa conservative financial policy. Using a new definition of financial conservatism, we investigate a sample of 21,959 Italian private firms for the 1998–2006 period and look for the determinants of financial conservatism according to the main theories of capital structure and financing policy. Our findings show that financially conservative firms are smaller, with more intangible and less tangible assets, lower effective tax rates and followa pecking order style financial policy. As has been found for their public counterparts, financially conservative private firms seem to pile up cash and their leverage potential before undertaking future investments.
Marco Bigelli, Juan Francisco Martín-Ugedo, F. Javier Sánchez-Vidal (2014). Financial conservatism of private firms. JOURNAL OF BUSINESS RESEARCH, 67, 2419-2427 [10.1016/j.jbusres.2014.02.009].
Financial conservatism of private firms
BIGELLI, MARCO;
2014
Abstract
The aim of this paper is to analyze the factors that motivate private firms to followa conservative financial policy. Using a new definition of financial conservatism, we investigate a sample of 21,959 Italian private firms for the 1998–2006 period and look for the determinants of financial conservatism according to the main theories of capital structure and financing policy. Our findings show that financially conservative firms are smaller, with more intangible and less tangible assets, lower effective tax rates and followa pecking order style financial policy. As has been found for their public counterparts, financially conservative private firms seem to pile up cash and their leverage potential before undertaking future investments.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.