Capital Structure Decision of New Technology-Based Firms: Evidence from Youth Entrepreneurship

Investment Management and Financial Innovations, Volume 8, Issue 4, 2011

11 Pages Posted: 7 Feb 2014

See all articles by Lucio Cassia

Lucio Cassia

University of Bergamo - SIGE Sezione di Ingegneria Gestionale

Tommaso Minola

University of Bergamo

Date Written: 2011

Abstract

The paper investigates the existence of a pecking order in new technology-based firms (NTBFs) financing, and provides an evidence on factors determining what source of capital NTBFs try to access. The authors pay particular attention to aspects of human capital such as age, education and experience and focus on potential singularities exhibited by young novice entrepreneurs and potential constraints that they experience. These entrepreneurs are found not to be financially constrained. The findings also contribute to the academic debate on the existence of a reversed pecking order for NTBFs. Results confirm traditional pecking order patterns and show that NTBFs do rely heavily on external debt, contradicting the most common theoretical predictions. However data also suggest that (as a new perspective) some light can be shed on the hierarchy between debt and equity as financial source preferred by NTBF when it is investigated from a longitudinal rather than a cross-sectional perspective.

Keywords: pecking order, venture capital, bank, NTBFs, entrepreneurial finance

JEL Classification: G32, G24, M13, O32

Suggested Citation

Cassia, Lucio and Minola, Tommaso, Capital Structure Decision of New Technology-Based Firms: Evidence from Youth Entrepreneurship (2011). Investment Management and Financial Innovations, Volume 8, Issue 4, 2011. Available at SSRN: https://ssrn.com/abstract=2391653

Lucio Cassia

University of Bergamo - SIGE Sezione di Ingegneria Gestionale ( email )

Via Pasubio 7b
Dalmine, Bergamo 24044
Italy

Tommaso Minola (Contact Author)

University of Bergamo ( email )

Via Salvecchio, 19
Bergamo, 24129
Italy

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