DO SMALL AND MEDIUM ENTERPRISES MATCH THEIR ASSETS AND LIABILITIES?

EVIDENCE FROM PORTUGAL

Journal Review Accounting Theory

DO SMALL AND MEDIUM ENTERPRISES MATCH THEIR ASSETS AND LIABILITIES? EVIDENCE FROM PORTUGAL
TEORI AKUNTANSI KELOMPOK III Afip Agrianto Audit W Pradana Aris Aviantara Cittanindya Andreyanto Ganesa Kusbandana Mas Nur Mukmin Samuel Marpaung Sukma Bayu Setiawan Widya Febriyari Anita 123121003 123121013 123121019 123120045 123121062 123121070 123121084

ABSTRACT
For SMEs various type of debt are not

identical. Asset and liability sides of the balance sheet are interrelated. Short-term and long-term funding sources are used to purchase various assets. Reject independence between two sides of balance sheet

INTRODUCTION
Interdependence between asset and liability

may not be so important for large corporation, but it has a major impact for SMEs (project size, riskiness, and time horizon) SMEs match their specific assets with specific liabilities. 1416 number of population (Portuguese industrial SMEs over the years 1990-2000) , use purposive sampling technique.

LITERATURE REVEIW
Asymmetric Information Banking Relationship for SMEs Assets Affects Liabilities Two Sides of The Balance Sheet are Not

Independent Investing Decision is Not Separate From The Financing Decision for Most Assets or Projects

HYPOTHESIS
Each asset has its own primary and secondary

sources of funding and that different assets have different capital structures

DATA AND METHODOLOGY

Primary data source is the Bank of Portugal Statistical Departments database. Sample Criteria: Manufacturing firms from the period 19902000 with more than 100 employees for al least one year. Firms with negative net worth and less than three continuous data years are not included in the sample Deleted companies with observations laying

in either tail (0,5%) of the distribution

DATA AND METHODOLOGY

6 industry groups: Food and drinks, Textiles

and Clothes, wood and paper past, chemical products, heavy industry, and machinery and equipment. Only 271 of 1416 total firms included in the sample have data for all 10 years

Sources and Uses of Funds for Portuguese Firms

Sources and Uses of Funds for Portuguese Firms

Sources of Funds
Internal Equity Cheap Trade Credits Expensive Trade Credits Bank Loans Other non-current liabilities (Leasing) Other short-term Debt

Uses of Funds

Classifying Trade Credits

RESULT
The Simultaneous Equation Model Test for Independence Funding for Individual Assets

The Simultaneous Equation Model

Test for Independence

The definition of independence for each

source of debt rejected

Funding for Individual Assets

Investments (Internal equity 18%, long-term bank loans 61%) Intangible Assets (asymmetric information) Tangible Assets (asymmetric information) Financing for Liquid assets (Internal equity 39%,

short-term other loans 15%) Financing for Debtors/AR (non-current liabilities 36%) Inventories (cheap trade credits 14%, expensive trade credits 20%)

CONCLUSION
Asset and liability sides of the balance sheet

are interrelated for SMEs Portuguese firms. Firms match specific assets with a spesific liabilities