Title: Financial literacy’s influence on the capital structure. A qualitative study on

decision makers financial literacy's

Subject: Bachelor’s thesis in business administration, 15 credits

Keywords: Financial literacy, Capital structure, Real estate companies, Small and

medium enterprises (SME)

Purpose: The purpose of this study is to create an understanding of how the decisions

makers financial literacy has an impact on the capital structure in small real estate

companies

Method: The study has been conducted with a abductive approach, which involves an

interplay between theory and empirics, allowing the theory to be adjusted based on

insights that surfaced from the empirical data.

Results: This study presents four main findings. The first finding is that financial

literacy exists as an asset within the companies, but not necessarily with the decision

makers themselves. The second finding shows that the level of financial literacy

influences how the company approaches financing. Applied knowledge contributed to

more opportunities and alternative choices, while basic knowledge resulted in more

traditional options such as bank loans. Basic knowledge led companies to follow the

pecking order theory, while deviations from the theory were linked to more

comprehensive knowledge. The third finding highlights that contextual knowledge can

be as important as financial literacy. Finally, the study shows that financial literacy

reduces information asymmetry and allows better communication with external actors,

which in turn leads to higher debt levels and impacts the capital structure.