Financing the Small Firm Start-Up: Determinants of Debt Use
While academic research concerning capital structure of large corporations has been abundant in the finance literature, studies of small firms have been somewhat less common, and investigation of capital structure at origin (start-up) has been virtually nil. In this paper we present empirical evidence concerning the start-up capital structures of small firms. We base this investigation upon characteristics of both owner and firm. We find the percent of the owner's income expected to be derived from the business to be positively associated with debt use and the owner's age to be negatively associated with debt use. We find that more debt is obtained if the business owner is married and less if he or she is black. Similarly, more debt is prevalent among start-up firms in transportation and utilities than those in other industries. When debt obtained from other than financial institutions is considered, factors such as gender, experience, education, and expected firm size also play a role in the structure of start-up capital.
Volume (Year): 3 (1993)
Issue (Month): 1 (Fall)
|Contact details of provider:|| Postal: 24255 Pacific Coast Hwy, Malibu CA|
Web page: http://bschool.pepperdine.edu/jef
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bates, Timothy, 1990. "Entrepreneur Human Capital Inputs and Small Business Longevity," The Review of Economics and Statistics, MIT Press, vol. 72(4), pages 551-59, November.
- Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
- Jerry A. Hausman & Andrew W. Lo & A. Craig MacKinlay, 1991.
"An Ordered Probit Analysis of Transaction Stock Prices,"
NBER Working Papers
3888, National Bureau of Economic Research, Inc.
- Hausman, Jerry A. & Lo, Andrew W. & MacKinlay, A. Craig, 1992. "An ordered probit analysis of transaction stock prices," Journal of Financial Economics, Elsevier, vol. 31(3), pages 319-379, June.
- Hausman, J.A. & Lo, A.W. & MacKinlay, A.C., 1991. "An Ordered Probit Analysis of Transaction Stock Prices," Weiss Center Working Papers 26-91, Wharton School - Weiss Center for International Financial Research.
- Hausman, Jerry A. & Lo, Andrew W. & MacKinlay, Archie Craig, 1955-, 1990. "An ordered probit analysis of transaction stock prices," Working papers 3234-90., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-27, August.
- Timothy Bates, 1989. "The changing nature of minority business: A comparative analysis of asian, nonminority, and black-owned businesses," The Review of Black Political Economy, Springer;National Economic Association, vol. 18(2), pages 25-42, September.
- Sugrue, Timothy F & Scherr, Fredrick C, 1989. "An Empirical Test of Ross's Cash Flow Beta Theory of Capital Structur e," The Financial Review, Eastern Finance Association, vol. 24(3), pages 355-70, August.
- Steven Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1987.
"Financing Constraints and Corporate Investment,"
NBER Working Papers
2387, National Bureau of Economic Research, Inc.
- Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
- Gavin Chen & John Cole, 1988. "The myths, facts, and theories of ethnic, small-scale enterprise financing," The Review of Black Political Economy, Springer;National Economic Association, vol. 16(4), pages 111-123, March.
When requesting a correction, please mention this item's handle: RePEc:pep:journl:v:3:y:1993:i:1:p:17-36. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Craig Everett)
If references are entirely missing, you can add them using this form.