An exploratory analysis of patterns of movement in the financial structure of Australian small firms

Abstract

This paper uses data from the Australian Bureau of Statistics Longitudinal Database to explore changes in the equity and debt structure of small firms in Australia. Initially the paper provides descriptive detail of financial structure groupings based on previously determined clusters. The nature of movements between groups across the three years included in the analysis is then outlined. Finally, results are presented of exploratory analysis that seeks to identify associations with a range of variables likely to be associated with a firm's membership of one of the five financial structure groups and possible temporal shifts. Included are industry, age, sales and number of employees (as indicators of size), profit (measured in absolute and relative terms), sales growth, and asset structure. Results suggest that, as expected, there are strong associations with demographic variables such as age, industry, size, and asset structure. While there is some association with performance measured by profit, no statistical association with growth was detected.