Thesis (Ph. D.)--University of Missouri-Columbia, 2006. / The entire dissertation/thesis text is included in the research.pdf file; the official abstract appears in the short.pdf file (which also appears in the research.pdf); a non-technical general description, or public abstract, appears in the public.pdf file. Title from title screen of research.pdf file viewed on (May 2, 2007) Vita. Includes bibliographical references.

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Thesis (Ph. D.)--University of Washington, 2001. / Vita. Includes bibliographical references (leaves 120-125).

Thesis (Ph. D.)--University of Washington, 2001. / Vita. Includes bibliographical references (leaves 120-125).

Submitted in compliance with the requirements for the Doctorate degree in Technology, Department of Public Management and Economics, Durban University of Technology, 2014. / Identifying the best level of debt financing within corporations and its determinants is one of the main issues in financial management theory, as the use of debt is believed to have an important influence on the performance of corporations. The majority of studies on debt financing have been undertaken using data from developed economies, focusing more on private sector non-financial corporations. This study investigated the factors influencing debt financing and whether the use of debt positively or negatively influences the financial performance of state corporations in Kenya. The “financial leverage”, which is the proportion of debt financing of state corporations in the Kenyan region, based on the total debt and the total assets, was the object of analysis for the period 2007 to 2011. Applying both descriptive and inferential statistics, and a hybrid of cross sectional and longitudinal quantitative surveys, primary data from questionnaires, and secondary data from the corporations’ financial statements, were utilized. The sample size used was 50 income generating state corporations in Kenya. Using the primary and secondary data, the study, in addition, determined the extent of debt financing and analysed the different types of debt financing used by the various state corporations. It focused on the use of financial ratio analysis to identify the financial performance of the corporations by applying a pooling of cross-section analysis. Moreover, the “financial leverage” ratio was analysed in correlation with the financial performance ratios, in order to identify the potential of anticipation for future financing options for state corporations in Kenya. Further, the regression analysis result was used to demonstrate whether there is a relationship between the corporation’s “financial leverage” and its financial performance ratios and the debt financing theory suitable for explaining debt capital structure within the state corporations. The panel data for financial performance helped in identifying whether there was a significant relationship between “financial leverage” of corporations and their financial performance. The results identified the main factors influencing debt financing within state-owned corporations in Kenya to include profitability, asset tangibility and corporation growth. It was also determined that debt financing is inversely related to financial performance of state-owned corporations in Kenya. In addition, the results revealed that state-owned corporations from developed and developing economies use capital market debt securities, such as bonds and notes, and derivative financial instruments, such as swaps, options and forward contracts. In contrast, these types of debt are not common within the Kenyan state-owned corporations. The developed and developing economies state-owned corporations are perceived to have embraced the new public sector financial management reforms agenda and operate in more developed and efficient capital markets. However, in Kenya, the new public sector financial management agenda may have not been implemented positively within the state-owned corporations and the country’s capital market may still be efficient. It is expected that the findings of this study would have vital policy implications for Kenyan state-owned corporations, in particular, and the government, in general.

The study is about enterprises in the formal and informal sectors in sub-Saharan Africa and consists of three separate but connected essays. The first essay examines whether or not structural reforms in the business regulatory environment, trade sector, and the financial sector, can influence access to debt financing for investment by enterprises in sub-Sahara Africa. The data is from the World Bank Enterprise Surveys. The analyses involve panel data models. The results are indicative that taken together; structural policy reforms reduce debt-financing constraints. Reforms in the business regulatory environment and the financial sector increase the likelihood of access to debt financing. However, for trade, beyond a threshold, further reductions in the tariff and non-tariff barriers make it harder for enterprises to obtain debt financing. These results have implications for the type of reforms pursued in various countries. The second essay examines how social capital, education, and liquidity constraints influence the decision of an entrepreneur to operate either in the formal or informal sector. For enterprises that did not register and operating for less than five years, there is evidence that the likelihood of running in the informal sector, as opposed to the formal sector, decreases with the entrepreneurial level of education while social capital increases this likelihood. However, for enterprises in the informal sector, operating for over five years, liquidity constraints impedes formalisation. In the long run, the decision to stay informal or formalise depends on funding constraints, the incidence of taxes in the formal sector and the perception that there are no benefits from operating in the formal sector. The third essay is about the relationship between enterprises in the formal and informal sector and aims to uncover, at least in part, whether or not social and human capitals are important in facilitating the linkages between enterprises in the formal and the informal sectors. The analysis involves flexible binary generalised extreme value models. The results are indicative that for both male and female entrepreneurs, social and human capitals have significant positive real effects on the likelihood of linkages. / October 2016

This study examines the interactive effects of family and minority ownership on small business debt financing. On one hand, family involvement in ownership has an influence on small firms financial decision. On the other hand, racial disparities in small business ownership make these firms experience differently in credit markets. In the context of family and minority involvements, this study measures two dimensions of small business debt financing, one for its use, a financing issue directly related to the capital structure, and the other for its cost, an agency issue related to the firms ability to borrowing and repayment. By using the unique data from the 1993, 1998, and 2003 Survey of Small Business Finances, our empirical results show significant evidence that family involvement has an impact on both the use of debt and the cost of debt financing in small businesses. That is, family ownership are negatively related to both the use of debt and the cost of debt financing, and when the firms are all non-visible minority owned, family firms have a lower level of debt and pay a lower interest rate than non-family firms. The results also show that the firm owners visible minority are positively related to the cost of debt financing, and when these firms are all family owned, visible minority owned firms pay a higher interest rate than non-visible minority owned firms. These results of our study also have important implications for both small business and family business research. For small business owners, it is important to understand the advantages and disadvantages of family as well as minority involvements to finance their businesses. And for policymakers and institutional lenders, understanding the family and minority effects also assists small businesses in obtaining debt financing.

This study examines the interactive effects of family and minority ownership on small business debt financing. On one hand, family involvement in ownership has an influence on small firms financial decision. On the other hand, racial disparities in small business ownership make these firms experience differently in credit markets. In the context of family and minority involvements, this study measures two dimensions of small business debt financing, one for its use, a financing issue directly related to the capital structure, and the other for its cost, an agency issue related to the firms ability to borrowing and repayment. By using the unique data from the 1993, 1998, and 2003 Survey of Small Business Finances, our empirical results show significant evidence that family involvement has an impact on both the use of debt and the cost of debt financing in small businesses. That is, family ownership are negatively related to both the use of debt and the cost of debt financing, and when the firms are all non-visible minority owned, family firms have a lower level of debt and pay a lower interest rate than non-family firms. The results also show that the firm owners visible minority are positively related to the cost of debt financing, and when these firms are all family owned, visible minority owned firms pay a higher interest rate than non-visible minority owned firms. These results of our study also have important implications for both small business and family business research. For small business owners, it is important to understand the advantages and disadvantages of family as well as minority involvements to finance their businesses. And for policymakers and institutional lenders, understanding the family and minority effects also assists small businesses in obtaining debt financing.

Financial crises in East Asia, Russia, and Latin America have caused some to wonder if there is something inherently unstable about financial markets that thwarts their ability to allocate capital appropriate^- and ultimately causes these crises. I build a multi-period, industry-level credit model in which debt-financed entrepreneurs develop homogeneous projects with long gestation periods, sequential investment requirements, and no intermediate cash flows. Entrepreneurs accumulate private signals about terminal demand, and if the signals are bad enough, may decide to halt project development before completion. The prevalence of project suspensions aggregates information and permits the industry size to adjust to the true state of terminal demand. Debt contracts depend upon the pricing power of the creditor; these contracts impact the size of the industry and the timing of the information aggregation. When demand realisations are poor, some investors will be disappointed ex post; aggregate disappointment will depend upon how long the investment behaviour has carried on before suspensions occur, and how large the industry is. I interpret situations of substantial aggregate disappointment as a 'crisis'. Principal results relate to the impact of debt finance on the timing and likelihood of project suspensions. With all equity (self) financing, suspensions will typically be observed, but they may occur relatively late in the game. In contrast, debt finance may lead to very rapid suspensions, depending upon the tools allocated to the creditor. When creditors exercise monopoly control over credit allocation and pricing, profit-maximising creditors can and will force suspensions. This may involve reducing the entrepreneurs' equity contribution and / or subsidizing credit in order to ensure entrepreneurial participation. When credit markets are competitive, creditors lack the pricing power that can be used to structure credit policies that force early suspensions. As debt accumulates and the entrepreneurs' share of liquidation proceeds dwindles, entrepreneurs may not voluntarily suspend operations as this will lead to loss of private benefits. Therefore, there may be no suspensions observed in equilibrium. This problem will be particularly acute when the entrepreneurs' initial equit)' stake is small.

Small- and medium-sized enterprises (SMEs) play an important role in modern business society but still face difficulties in debt financing. Literatures suggest that family involvement and external auditing can assist small firms to mitigate agency problems that impede the access to loans, and the liability of newness could be a factor in small business debt financing. Our research examines how family involvement affects cost of debt upon the different choices on external auditing, and how the liability of newness works. We find when engaging external auditing, family involvement is not a significant influencer in reducing the cost of debt for small businesses. Besides, when the external auditing is not engaged, family involvement becomes a significant influencer. We also find that when external auditing is not engaged, family involvement works in reducing the cost of debt only when the liability of newness is a factor.