FIRM CHARACTERISTICS, DEBT MATURITY STRUCTURE, AND INNOVATION PERFORMANCE OF SMALL FIRMS

Abstract

Based on a large sample of 497 small Slovenian manufactory firms and applying structural equation modeling, we investigate the relationship between six different firm characteristics (firm legal status, firm age, assets tangibility, cash flow, long‐term financing of long‐term assets and inventories ratio, and the quick ratio) and debt maturity structure of small firms in terms of short‐term debt and long‐term debt. In addition, we uncover the relationship between debt maturity structure and innovation performance of small firms. The results of our study point to the importance of external financial sources for firm innovation performance and to the relevance of specific firm characteristics to explain debt maturity structure of small firms.