|
If you are seeing this message, you may be experiencing temporary network problems. Please wait a few minutes and refresh the page. If the problem persists, you may wish to report it to your local Network Manager.
It is also possible that your web browser is not configured or not able to display style sheets. In this case, although the visual presentation will be degraded, the site should continue to be functional. We recommend using the latest version of Microsoft or Mozilla web browser to help minimise these problems.
Wiley InterScience | |||||||||||
  European Financial ManagementVolume 13 Issue 1, Pages 101 - 133 Published Online: 8 Jan 2007 © 2010 Blackwell Publishing Ltd Published in conjunction with the European Financial Management Association
Abstract | References | Full Text: HTML, PDF (Size: 174K) | Related Articles | Citation Tracking  The Determinants of Financial Structure: New Insights from Business Start-ups The authors thank John Doukas (Managing Editor) and an anonymous referee, Marnik Dekimpe, Cynthia McDonald, Kristian Miltersen, Greg Niehaus, Filip Roodhooft, Henri Servaes, Cynthia Van Hulle and Joseph Zechner for useful comments and suggestions on an earlier draft of this paper. They also appreciate the provision of data by Graydon Belgium NV, and the financial support from the Foundation for Scientific Research (FWO, G.0149.97) and KU Leuven (Research Grant 96/3). Copyright 2007 The Authors Journal compilation © 2007 Blackwell Publishing Ltd KEYWORDS
capital structure
•
information and incentive problems
•
private benefits of control
•
start-ups
KEYWORDS
C31 •
G21 •
G32 Abstract
Business start-ups lack prior history and reputation, face high failure risk, and have highly concentrated ownership. The resulting information and incentive problems, combined with entrepreneurial private benefits of control, affect initial financing decisions. This paper examines simultaneously the impact of these issues on leverage, debt mix and maturity. We find that start-ups with high adverse selection and risk shifting problems contract less bank debt but compensate with other debt sources. Start-ups in growing industries have lower leverage, but raise more bank debt. Entrepreneurs with large private control benefits contract less but longer term bank loans to lower the default probability. | 
|
