The Influence of Age and Size on Family-Owned Firms’ Financing Decisions: Empirical Evidence Using Panel Data

Based on four samples of Portuguese family-owned firmsdi) 185 young, low-sized family-owned firms; ii) 167 young, high-sized familyowned firms; iii) 301 old, low-sized family-owned firms; and iv) 353 old, high-sized family-owned firms d we show that age and size are fundamental characteristics in family-owned firms’ financing decisions. The multiple empirical evidence obtained allows us to conclude that the financing decisions of young, low-sized family-owned firms are quite close to the assumptions of Pecking Order Theory, whereas those of old, high-sized family-owned firms are quite close to what is forecast by Trade-Off Theory. The lesser information asymmetry associated with greater age, the lesser likelihood of bankruptcy associated with greater size, as well as the lesser concentration of ownership and management consequence of greater age and size, may be especially important in the financing decisions of family-owned firms. In addition, we find that GDP, interest rate and periods of crisis have a greater effect on the debt of young, low-sized family-owned firms than on that of family-owned firms of the remainder research samples.

Impact of Public Debt on Economic Growth in Advanced Economies

This paper examines the impact of public debt on the economic growth in advanced economies over a period of 1946 to 2009, using an econometric approach. The findings suggested an inverse relationship between public debt and economic growth in advanced economies. These relationships were found to be significant as well. Model results also show that the real GDP growth rate does not decline sharply whether the public debt-to-GDP ratio is lower than 220%. The public debt-to-GDP ratio elasticity of the real growth rate shows that an increase of 1% in public debt/GDP category above 120% decreases the real GDP growth rate in 1.13%. The negative effect of public debt is only stronger on the real GDP growth rate in advanced economies when the public debt-to-GDP ratio is above 220%. Finally, these findings lead us to reassess the austerity agenda, and the governments should devise new strategies for public debt management in advanced economies, taking into account their economic and financial performance.