A Note on the Use of Debt by Venture Capital Backed Firms

Rick H. Mull and Drew B. Winters
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Rick H. Mull: Fort Lewis College
Drew B. Winters: University of Southern Mississippi

Journal of Entrepreneurial Finance, 1996, vol. 5, issue 3, 287-93

Abstract: Much of the current research regarding the venture capitalist examines samples of venture capital (VC) backed firms rather than the venture capitalist itself. While VC backed firms may represent the most reasonable proxy available for the study of the venture capitalist, consideration of firm-specific characteristics may need to be included to mitigate biased conclusions. Controlling for the determinants of capital structure, we examine the persistence of previously noted differences in capital structure choice and find that VC backing does not systematically alter the use of debt by firms. These results suggest that not controlling for firm specific differences when contrasting VC and non-VC backed firms may lead to inaccurate conclusions in venture capital research.

Keywords: Capital; Firm; Venture Capital (search for similar items in EconPapers)
JEL-codes: G24 G32 M13 (search for similar items in EconPapers)
Date: 1996
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