Capital structure theory and new technology firms: is there a match?
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.
Keywords
Citation
Coleman, S. and Robb, A. (2012), "Capital structure theory and new technology firms: is there a match?", Management Research Review, Vol. 35 No. 2, pp. 106-120. https://doi.org/10.1108/01409171211195143
Publisher
:Emerald Group Publishing Limited
Copyright © 2012, Emerald Group Publishing Limited