TY - JOUR
T1 - The impact of external financing on firm value and a corporate governance index
T2 - SME evidence
AU - Al-Najjar, Basil
AU - Al-Najjar, Dana
PY - 2017/5/15
Y1 - 2017/5/15
N2 - Purpose: The purpose of this paper is to investigate the effect of external financing needs on both firm value and corporate governance mechanisms within the UK SME context. This framework is of importance because of the limited external financial resources SMEs might face. Design/methodology/approach: The authors consider the endogeneity problem between corporate governance mechanisms and firm value, and hence, the three stages least squares and the instrumental variables based on two stages least squares estimation methods are employed. Findings: The authors find a positive relationship between external financing needs and firm value. In addition, the authors detect that size and profitability are positively associated with firm value in the sample. Concerning the corporate governance index (CGI), the authors detect that big SMEs and those with low-debt levels have better corporate governance structures. Originality/value: The authors employ a CGI for the sample which is constructed using ten corporate governance variables. The authors also examine different factors that affect SMEs 2019 governance by applying different models including logistic analysis.
AB - Purpose: The purpose of this paper is to investigate the effect of external financing needs on both firm value and corporate governance mechanisms within the UK SME context. This framework is of importance because of the limited external financial resources SMEs might face. Design/methodology/approach: The authors consider the endogeneity problem between corporate governance mechanisms and firm value, and hence, the three stages least squares and the instrumental variables based on two stages least squares estimation methods are employed. Findings: The authors find a positive relationship between external financing needs and firm value. In addition, the authors detect that size and profitability are positively associated with firm value in the sample. Concerning the corporate governance index (CGI), the authors detect that big SMEs and those with low-debt levels have better corporate governance structures. Originality/value: The authors employ a CGI for the sample which is constructed using ten corporate governance variables. The authors also examine different factors that affect SMEs 2019 governance by applying different models including logistic analysis.
KW - Corporate governance index
KW - External financing needs
KW - SMEs
KW - UK
UR - http://www.scopus.com/inward/record.url?scp=85017655030&partnerID=8YFLogxK
U2 - 10.1108/JSBED-11-2016-0172
DO - 10.1108/JSBED-11-2016-0172
M3 - Article
AN - SCOPUS:85017655030
VL - 24
SP - 411
EP - 423
JO - Journal of Small Business and Enterprise Development
JF - Journal of Small Business and Enterprise Development
SN - 1462-6004
IS - 2
ER -