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DO SMALL AND MEDIUM

ENTERPRISES MATCH THEIR ASSETSAND LIABILITIES?

EVIDENCE FROM PORTUGAL

Journal ReviewAccounting Theory

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DO SMALL AND MEDIUM

ENTERPRISES MATCH THEIR ASSETS

AND LIABILITIES?

EVIDENCE FROM PORTUGAL

TEORI AKUNTANSI

KELOMPOK III

Afip Agrianto 123121003Audit W PradanaAris Aviantara 123121013

Cittanindya Andreyanto 123121019Ganesa Kusbandana 123120045Mas Nur MukminSamuel Marpaung 123121062Sukma Bayu Setiawan 123121070

Widya Febriyari Anita 123121084

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ABSTRACT

For SMEs various type of debt are notidentical.

Asset and liability sides of the balance sheetare interrelated.

Short-term and long-term funding sourcesare used to purchase various assets.

Reject independence between two sides ofbalance sheet

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INTRODUCTION

Interdependence between asset and liabilitymay not be so important for largecorporation, but it has a major impact for

SMEs (project size, riskiness, and timehorizon)

SMEs match their specific assets with specificliabilities.

1416 number of population (Portugueseindustrial SMEs over the years 1990-2000) ,use purposive sampling technique.

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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 TheFinancing Decision for Most Assets orProjects

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HYPOTHESIS

Each asset has its own primary and secondarysources of funding and that different assetshave different capital structures

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DATA AND METHODOLOGY

Primary data source is the Bank of PortugalStatistical Departments database.

Sample Criteria:

Manufacturing firms from the period 1990-2000 with more than 100 employees for alleast one year.

Firms with negative net worth and less than

three continuous data years are not includedin the sample

Deleted companies with observations layingin either tail (0,5%) of the distribution

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DATA AND METHODOLOGY

6 industry groups: Food and drinks, Textilesand Clothes, wood and paper past, chemicalproducts, heavy industry, and machinery andequipment.

Only 271 of 1416 total firms included in thesample have data for all 10 years

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Sources and Uses of Funds for

Portuguese Firms

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Sources and Uses of Funds for

Portuguese Firms

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Sources of Funds

Internal Equity

Cheap Trade Credits

Expensive Trade Credits Bank Loans

Other non-current liabilities (Leasing)

Other short-term Debt

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Uses of Funds

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Classifying Trade Credits

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RESULT

The Simultaneous Equation Model

Test for Independence

Funding for Individual Assets

h i l i

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The Simultaneous Equation

Model

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Test for Independence

The definition of independence for eachsource of debt rejected

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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 liabilities36%)

Inventories (cheap trade credits 14%, expensivetrade credits 20%)

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CONCLUSION

Asset and liability sides of the balance sheetare interrelated for SMEs Portuguese firms.

Firms match specific assets with a spesificliabilities