The Capital Structure Decisions of New Firms

Alicia M. Robb and David Robinson

No 16272, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper investigates the capital structure choices that firms make in their initial year of operation, using restricted-access data from the Kauffman Firm Survey. Contrary to many accounts of startup activity, the firms in our data rely heavily on external debt sources such as bank financing, and less extensively on friends and family-based funding sources. This fact is robust to numerous controls for credit quality, industry, and business owner characteristics. The heavy reliance on external debt underscores the importance of well functioning credit markets for the success of nascent business activity.

JEL-codes: G21 G24 L26 (search for similar items in EconPapers)
Date: 2010-08
Note: CF PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Published as Alicia M. Robb & David T. Robinson, 2014. "The Capital Structure Decisions of New Firms," Review of Financial Studies, Society for Financial Studies, vol. 27(1), pages 153-179, January.

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Journal Article: The Capital Structure Decisions of New Firms (2014)
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