Financial Factors Affecting on Investment Decision of Organic Agribusiness SMEs in Chiang Mai Province, Thailand

Main Article Content

Sirikul Tulasombat

Abstract

Small and Medium Enterprises (SMEs) contribute immensely to the economic development of any country especial in Thailand. SMEs have to know about financial management combined with the uncertainty of the business environment which often leads SMEs to serious problems regarding financial performances. Organic agribusiness SMEs is the one of businesses which give precedence to develop on investment as well. In addition, the main objective of this study explores financial factors affecting investment decision of organic agribusiness SMEs by finding the effect between financial factors and investment decision. Primary data is collected by using questionnaires, and a multiple regression analysis is applied to determine the relationship of financial factors and investment decisions, independent variables are 4 financial variables which are working capital management, capital budgeting evaluation, debt financing, and equity financing. Dependent variables are investment decisions including cash, account receivable, inventory, and fix assets. Therefore, the results indicate significant effects among capital budgeting evaluation, debt financing, equity financing and investment decision which are positive relationships. However, there is the insignificant effect between working capital management and investment decision for SMEs in organic agribusiness. Moreover, SMEs organic agribusiness have to pay more attention on every financial factors which can be useful for investment decision making and make more benefit for their organic agribusiness also.

Article Details

Section
Articles
Author Biography

Sirikul Tulasombat

Assistant professor Faculty of Business Administration Maejo University

References

Ang, J. S. (1991). Small Business Uniqueness and the Theory of Financial Management. Journal of Small Business Finance, Spring, 1-13.
Ang, J. S. (1992). On the Theory of Finance for Privately Held Firms. The Journal of Small Business Finance, 1(3), 185-203.
Berger, A. N., & Udell, G. F. (1998).The Economics of Small Business Finance: The Roles of Private Equity and Debt Markets in the Financial Growth Cycle. Journal of Banking & Finance, 22, 613-673.
Caneghem, T. V., & Campenhout, G. V. (2010). Quantity and Quality of Information and SME Financial Structure. Springer Science Business Media. Published Online: 24 November 2010.
Cassar, G. (2004). The Financing of Business Start-ups. Journal of Business Venturing, 19, 261–283.
Deloof, M. (2003). Does Working Capital Management Affect Profitability of Belgian Firms? Journal of Business Finance & Accounting, 30(3) & (4), 573-589.
Fatoki, O. O., & Asah, F. (2011). The Impact of Firm and Entrepreneurial Characteristics on Access to Debt Finance by SMEs in King Williams’ Town, South Africa. International Journal of Business and Management, 6 (8).
Frelinghaus, A., Mostert, B., & Firer, C. (2005). Capital Structure and the Firm’s Life Stage. South African Journal of Business Management, 36 (4), 9-18.
García‐Teruel, P.J., & Martínez‐Solano, P. (2007). Effects of Working Capital Management on SME Profitability. International Journal of Managerial Finance, 3 (2), 164-177.
Gill. A., Biger, N., & Mathur, N. (2010). The Relationship between Working Capital Management and Profitability: Evidence from the United States. Neil Mathur Business and Economics Journal, BEJ-10.
Gitman, L.J. (2003). The Principles of Managerial Finance. New York: Pearson Education Inc.
Ilias, E. S. (2010). The Decision Functions of Financial Management. Retrieved May 1, 2017, from http://financialmanagementinfo. blogspot. com /2010/01/ decision-functions-of-financial.html.
Modigliani, F., & Miller, M.H. (1963). Corporate Income Taxes and the Cost of Capital: A Correction. American Economic Review, 53 (3), 433-444.
Romano, C.A., Tanewski, G.A., &, Smyrnios, K. S. (2001) Capital Structure Decision Making: A Model for Family Business. Journal of Business Venturing, 16 (3), 285-310.
Smith, Y., & Watkins, J. A. (2012). A Literature Review of Small and Medium Enterprises (SMEs) Risk Management Practices in South Africa. African. Journal of Business Management, 6 (21), 6324-6330.