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What drives gearing in early-stage firms? Evidence from blue economy startups

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  • Zhu, Bo
  • Liang, Chao
  • Mirza, Nawazish
  • Umar, Muhammad

Abstract

In the blue economy start-ups play a critical role as they bring innovation, technology, and new business models, driving sustainable growth and development. However, blue start-ups also experience financing constraints and in this research, we evaluate the factors that drive their gearing ratio. Using a comprehensive sample of firms across twenty-seven EU member states between 2013 and 2020, we find a negative link between debt ratio and climatic and ocean disruptions. We also report a positive relationship between asset tangibility and gearing, while regulations have a negative influence on the choice of debt as the preferred mode of financing. Our findings also suggest that blue startups with more private equity, have a lower variation in their capital mix. Finally, the fundamentals play a favorable role to motivate the use of debt financing. These findings have important implications for blue start-ups and the related ecosystem.

Suggested Citation

  • Zhu, Bo & Liang, Chao & Mirza, Nawazish & Umar, Muhammad, 2023. "What drives gearing in early-stage firms? Evidence from blue economy startups," Journal of Business Research, Elsevier, vol. 161(C).
    • Handle: RePEc:eee:jbrese:v:161:y:2023:i:c:s0148296323001984
    DOI: 10.1016/j.jbusres.2023.113840
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    4. Wang, Haiyan & Mirza, Nawazish & Umar, Muhammad & Xie, Xin, 2023. "Climate change and blue returns: Evidence from Niche firms in China," Finance Research Letters, Elsevier, vol. 56(C).
    5. Gyensare, Michael Asiedu & Miri, Domnan & Zahoor, Nadia & Alajaty, Mahmoud, 2024. "Aspiring to go abroad: How and when international entrepreneurial aspiration fuel emerging markets entrepreneurial ventures’ internationalisation speed," Journal of International Management, Elsevier, vol. 30(2).
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