 Debt financing, survival, and growth of start-up firmsRebel Cole and Tatyana Sokolyk Journal of Corporate Finance, 2018, vol. 50, issue C, 609-625 Abstract: We analyze the relation between different forms of debt financing at the firm's start-up and subsequent firm outcomes. We distinguish between business debt, obtained in the name of the firm, and personal debt, obtained in the name of the firm's owner and used to finance the start-up firm. Start-up firms with better performance prospects are more likely to use debt and, in particular, business debt. Compared to all-equity firms, firms using debt at the initial year of operations are significantly more likely to survive and achieve higher levels of revenue three years after the firm's start-up. However, results hold for business debt only. Debt obtained in the name of the firm is associated with longer survival time and higher revenues, while debt obtained in the name of the firm's owner has no effect on survival time and is associated with lower revenues. Keywords: Business debt; Capital structure; Debt; Entrepreneurial finance; Growth; Lenders' selection and monitoring; Kauffman; KFS; Personal debt; Start-up; Survival; Trade credit (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:50:y:2018:i:c:p:609-625 DOI: 10.1016/j.jcorpfin.2017.10.013 Access Statistics for this article Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter More articles in Journal of Corporate Finance from Elsevier |
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