Contact us
[email protected] | |
3275638434 | |
Paper Publishing WeChat |
Useful Links
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Article
How Much Is the Financial Structure of Italian Textile SMEs?
Author(s)
Loris Nadotti, Valeria Vannoni
Full-Text PDF XML 349 Views
DOI:10.17265/1537-1506/2019.01.004
Affiliation(s)
University of Perugia, Perugia, Italy
ABSTRACT
The textile sector in Italy has
traditionally played an important role in the national economy: To date, it weighs about
4% of GDP. Despite international competition, the sector maintains its
importance which is internationally recognized. The firms in the sector are
committed to remaining competitive, investing in innovation and communication,
increasingly seeking internationalization. To keep up with the competition, it
is necessary to have financial resources to cover these investments. In Italy,
with the exception of some great outliers, the sector is dominated by small and
medium-sized enterprises: The small size makes often more difficult to raise
funds. The paper aims to analyze the cost of financing for small and medium
enterprises (SMEs) in the Italian textile sector, verifying also if it remains
a prevailing orientation towards debt financing.
Using the Weighted
Average Cost of Capital (WACC) formula, the study
focuses on 2,446 companies, with financial data available on the Orbis database
by Bureau van Dijk. Results
confirm a strong unbalanced structure towards debt financing; however, the cost of capital is mitigated by the
cost of “standing alone” debt, much lower than
that one of shareholders’ funds.
KEYWORDS
capital structure, cost of capital, small business financing, textile sector
Cite this paper
References