Capital Structure Determinants in Growth Firms Accessing Venture Funding
THE OXFORD HANDBOOK OF VENTURE CAPITAL, Chapter 10, pp. 328-353, Douglas Cumming, ed., Oxford University Press, USA
31 Pages Posted: 16 Feb 2009 Last revised: 8 Feb 2012
Date Written: February 16, 2009
This paper focuses on the capital structure determinants of VC-backed firms prior to the VC investment event. The analyses are carried out on a matched sample of Spanish VC-backed firms at the expansion stage and similar firms that did not receive venture funding. In the former, we find that the structure of assets, size and growth opportunities have a positive impact on the debt ratio, whereas profitability has a negative impact. Conversely, we find that only the structure of assets is positively related to the leverage ratio in non-VC-backed firms. Overall, there is stronger evidence on the Pecking Order Theory for VC-backed firms.
Keywords: Capital structure, determinants, growth, venture capital
JEL Classification: G32, G24
Suggested Citation: Suggested Citation