Financing Decisions Along a Firm’s Life‐Cycle: Debt as a Commitment Device
Goethe University Frankfurt - Institute of Economics
European Financial Management, Vol. 17, Issue 5, pp. 898-927, 2011
We analyse the life‐cycle patterns of a firm’s financing decisions and their interaction with future growth and development decisions. We derive different financing sequences which we link to existing empirical research as well as derive new testable hypotheses regarding differences in firms’ financing decisions to project, firm, market and country characteristics. We provide a rationale for the importance of (external) start‐up debt financing as observed in recent empirical studies. Furthermore, we argue that equity financing at both development stages is more likely for closely‐held firms and in countries in which entrepreneurs face high stigmatisation costs.
Number of Pages in PDF File: 30
Keywords: financing decisions, life‐cycle, firm growth, path dependencies
JEL Classification: D92, G32Accepted Paper Series
Date posted: October 19, 2011
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo8 in 0.610 seconds