The capital structure of Italian unlisted companies in the wine industry

Purpose The purpose of our article is to investigate the capital structure choices of Italian wine companies. Design/methodology/approach Using balanced panel data of 4,260 firm-year observations, this study analyses the determinants of the capital structure of 852 unlisted small and medium-sized Italian wine firms. Findings The results obtained seem to be consistent with the pecking order theory. We find a negative relationship between profitability and leverage and a positive relationship between non-debt tax shields and leverage, which would provide evidence that Italian wine firms do not raise financial debt for tax purposes. Using a quantile panel regression, we also find heterogeneity among the capital structure of Italian wine firms. Practical implications The results provide practical implications that help stakeholders – especially investors, policy makers and financial institutions – better understand small and medium-sized enterprise financing in the wine sector. Policy makers should address structural financing barriers by promoting improved credit access through targeted lending and risk-mitigating guarantees. Originality/value Our article contributes to the literature on capital structure in at least three ways. First, we investigate the Italian wine industry, which has experienced significant growth in recent years. Second, we analyse the capital structure of small and medium-sized wineries, whose size can hinder access to financial resources and corporate investment and, consequently, compromise their growth. Third, we also investigate heterogeneity in the capital structure of Italian wine firms.