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Capital structure theory and new technology firms: is there a match?

Capital structure theory and new technology firms: is there a match? Purpose – The purpose of this paper is to explore the extent to which various theories of capital structure “fit” in the case of new technology‐based firms. Design/methodology/approach – This study uses data from the Kauffman Firm Survey, a longitudinal data set of over 4,000 firms in the USA. Descriptive statistics and multivariate results are provided. Findings – The authors' findings reveal that new technology‐based firms demonstrate different financing patterns than firms that are not technology‐based. Research limitations/implications – Although some support was found for both the Pecking Order and Life Cycle theories, the results also indicate that technology‐based entrepreneurs are both willing and able to raise substantial amounts of capital from external sources. Practical implications – Technology‐based entrepreneurs need external sources of equity, in particular, in order to launch and grow their firms. Originality/value – To the authors' knowledge, this is the first article to test specific theories of capital structure using a large sample of new technology‐based firms in the USA. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Management Research Review Emerald Publishing

Capital structure theory and new technology firms: is there a match?

Susan Coleman; Alicia Robb
Management Research Review , Volume 35 (2): 15 – Jan 20, 2012
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References (36)

Publisher
Emerald Publishing
Copyright
Copyright © 2012 Emerald Group Publishing Limited. All rights reserved.
ISSN
2040-8269
DOI
10.1108/01409171211195143
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to explore the extent to which various theories of capital structure “fit” in the case of new technology‐based firms. Design/methodology/approach – This study uses data from the Kauffman Firm Survey, a longitudinal data set of over 4,000 firms in the USA. Descriptive statistics and multivariate results are provided. Findings – The authors' findings reveal that new technology‐based firms demonstrate different financing patterns than firms that are not technology‐based. Research limitations/implications – Although some support was found for both the Pecking Order and Life Cycle theories, the results also indicate that technology‐based entrepreneurs are both willing and able to raise substantial amounts of capital from external sources. Practical implications – Technology‐based entrepreneurs need external sources of equity, in particular, in order to launch and grow their firms. Originality/value – To the authors' knowledge, this is the first article to test specific theories of capital structure using a large sample of new technology‐based firms in the USA.

Journal

Management Research Review – Emerald Publishing

Published: Jan 20, 2012

Keywords: United States of America; Capital structure; Financing; Business formation; Technology led strategy; Technology‐based firms; Kauffman Firm Survey

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