An Initial Investigation of Firm Size and Debt Use by Small Restaurant Firms

摘要

This study examines whether or not size affects the use of debt used by small restaurant firms. Owners often use debt as a mechanism to minimize agency costs in large firms. However, there is no consensus in the literature about how to measure firm size. This study uses different proxies for size and finds the significant measures to be total assets, total sales, number of owners, and number of employees. The study finds number of owners and total assets to be variables with maximum explanatory power.