The impact of capital structure on smes in the selected countries-A study on India, Malaysia, Singapore and Thailand

The present research paper examines relationship between the capital structure impacts on SMEs performance. The study test hypothesis is that financial leverage positively affects SMEs (Malaysia, India, Thailand and Singapore) activity through disciplining managers, but the main important components has considered for this paper tax shield and signalling effects. According to Modigliani & Miller (1958, 1963) the analysis of the capital structure decisions has been significant area of research inside the field of finance. In present study it is SMEs and examined whether the factors that affect capital structure are the same for companies belonging to these different size-based groups of SMEs. In besides, given that considerable proportions of SMEs from selected countries have zero long-term debt, the paper analysed the determinants of the probability that a SMEs is using long-term debt financing are the same as determinants of the proportion of this type of financing in capital structure.