Abstract:

Financing decisions generally have an important impact on the future of an entity. Therefore, they are often not easy to be taken by the person responsible for financing issues (Boerner et al. 2010, 228). Furthermore, there are enormous implications for small and medium-sized companies as they demonstrate characteristics that complicate the choice of an adequate financing instrument. Although they may use several distinctive financing instruments, the access to the capital market, for example in the form of an issue of shares, is sometimes rather limited. Besides that the legal form chosen by the entity and the relatively high costs related to an issue of shares or bonds often constitute constraints of such financing options (Kern 2007, 9; Boerner et al. 2010, 228). Furthermore, decision makers of small and medium-sized companies are reluctant if it comes to the fact that they have to disclose their companies’ figures. As a consequence, there is a certain hesitance regarding transparency and disclosure (Rettberg 2012, 291).