Outside Entrepreneurial Capital

39 Pages Posted: 8 Feb 2005 Last revised: 10 Sep 2008

See all articles by Andy Cosh

Andy Cosh

University of Cambridge - Judge Business School

Douglas J. Cumming

Florida Atlantic University

Alan Hughes

University of Cambridge - Centre for Business Research (CBR)

Date Written: August 17, 2007

Abstract

This paper investigates factors that affect rejection rates in applications for outside finance among different types of investors (banks, venture capital funds, leasing firms, factoring firms, trade customers and suppliers, partners and working shareholders, private individuals and other sources), taking into account the non-randomness in a firm's decision to seek outside finance. The data support the traditional pecking order theory. Further, the data indicate that firms seeking capital are typically able to secure their requisite financing from at least one of the different available sources. However, external finance is often not available in the form that a firm would like.

Keywords: Entrepreneurial Finance, Capital Gaps, Pecking Order, Adverse Selection

JEL Classification: G21, G22, G23, G24, G31, G32, G35

Suggested Citation

Cosh, Andy and Cumming, Douglas J. and Hughes, Alan, Outside Entrepreneurial Capital (August 17, 2007). Economic Journal, Forthcoming, Available at SSRN: https://ssrn.com/abstract=663841

Andy Cosh

University of Cambridge - Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom

Douglas J. Cumming (Contact Author)

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

HOME PAGE: http://booksite.elsevier.com/9780124095373/

Alan Hughes

University of Cambridge - Centre for Business Research (CBR) ( email )

Top Floor, Judge Business School Building
Trumpington Street
Cambridge, CB2 1AG
United Kingdom
+44 1223 765335 (Phone)

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