Exploring the Influence of Firm Size on Leverage Evidence from OMX Stockholm Small Cap
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Abstract
This study examines the relationship between leverage and firm size for a sample of 83 firms listed on OMX Stockholm Small Cap between 2018 and 2022. Additionally, it explores the impact of the Covid-19 crisis on this relationship through quarters experiencing negative GDP growth. This study uses panel data and a random effects model to reveal a positive and statistically significant association between different leverage ratios and firm size. However, the actual economic impact of firm size on leverage was found to be minimal. This study, instead, identifies other factors, namely asset tangibility, as having a greater influence on the capital structure of smaller Swedish firms. These findings shed light on the complex dynamics of capital structure decisions and highlight the importance of considering multiple factors beyond firm size alone.
Degree
Student essay
Collections
View/ Open
Date
2023-07-06Author
Claesson, Albin
Hernandez, Jonathan
Keywords
Firm size
Capital Structure
Leverage
Constraints
Crisis
Series/Report no.
202307:066
Language
eng