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This book seeks empirically to identify the determinants of the very small firms financial leverage. This is important because both these enterprises have been under-researched and research in the area has been troubled by samples biased towards very large enterprises. Results support hypotheses that size, growth, operational cycle and entrepreneur s risk tolerance are positively and business risk, asset composition, profitability and inflation negatively associated with financial leverage. Additionally, there is support for a hypothesized relationship with industry but not with enterprise age. To achieve a wider understanding of these relationships, financial leverage is studied in combination with own working capital.
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