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Do Firms Care Who Provides their Financing?

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  • Jeffrey K. MacKie-Mason

Abstract

Several types of evidence are presented to demonstrate that firms are concerned with who provides their financing, not just with the debt/equity distinction. Aggregate and industry trends and patterns in the incremental sources of financial capital are documented, and a large sample of incremental corporate financial decisions is econometrically analyzed. There are large and persistent differences in the patterns of internal and external financing, both in the aggregate and across industries. Individual firms are shown to have distinct preferences for different providers of funds. Several indicators of potentially costly hidden information problems are important and significant determinants of choices between private and publicly-marketed sources, even after controlling for the type of security (debt or equity).

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3039.

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Date of creation: Jul 1989
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Publication status: published as R. Glenn Hubbard, editor. Assymetric Information, Corporate Finance and Investment. Chicago: The University of Chicago Press, 1990.
Handle: RePEc:nbr:nberwo:3039

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