Clusters of Financial Structure in Australian Small Firms

Abstract

This paper uses data from the Australian Bureau of Statistics Longitudinal Database to explore the equity and debt structure of small firms in Australia. Initially the paper provides descriptive detail of financial structure that is then used in a cluster analysis process to identify a range of possibly “typical” financial structures. Results are then presented of analysis that seeks to identify associations with a range of financial variables posited to influence such structures. Included are profit (measured in absolute and relative terms), sales growth, asset structure, and sales (as an indicator of size). Results suggest that there are distinct clusters based around key funding sources and that cluster membership is moderately associated with profit and sales based variables and strongly associated with asset structure.