Determinants of equity financing: a demand-side analysis of Irish indigenous technology-based firms

Power Jane, Power Bernadette and Ryan Geraldine ()
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Power Jane: Cork University Business School, University College Cork, Cork, Ireland
Power Bernadette: Cork University Business School, University College Cork, Cork, Ireland
Ryan Geraldine: Cork University Business School, University College Cork, Cork, Ireland

The Irish Journal of Management, 2022, vol. 41, issue 1, 52-68

Abstract: Successful high-technology industries enhance productivity, competition, and consumer choice. To support their innovating activities, these firms need access to finance. Given the uncertain nature of innovation, along with the high associated cost, many firms turn to equity financing. Using novel survey data for 153 indigenous equity and 141 indigenous non-equity financed high-tech firms, we examine what determines how these firms raise equity finance (i.e., independent and corporate venture capital, business angel, government-sponsored) and non-equity finance (i.e., personal investment, family and friend investment, debt finance). We find that debt finance is negatively associated with equity financing in high-tech firms. Moreover, in our sample of high-tech firms, we find that innovating firms, export-oriented firms operating in niche markets, and firms with high levels of human capital have a greater probability of being equity financed.

Keywords: Equity finance; non-equity finance; high-tech firms; innovation; probit (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:irjman:v:41:y:2022:i:1:p:52-68:n:4

DOI: 10.2478/ijm-2022-0002

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