The capital structure of Finnish biotechnology SMEs: An empirical analysis

This empirical study tests three different theoretical frameworks of capital structure choice on a cross-sectional data of 59 Finnish biotechnology SMEs. The theoretical approaches comprehend principal-agent, asymmetric information and trade-off theories. The purpose of the paper is to trial the validity of the theories applied and, more importantly, to deepen and broaden existing knowledge on a young and scarcely studied sector showing great potential, the Finnish biotechnology industry. The results of the empirical study based on regression analysis do not provide unconditional support for any of the frameworks. The evidence presented is only partially supportive. Reasons for this might be inherent in the general nature of the theories themselves as well as some unique characteristics of the biotech industry. – Biotechnology ; capital structure ; agency costs ; pecking order ; asymmetric information ; tradeoff theory