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

Susan Coleman; Alicia Robb

doi:10.1108/01409171211195143

Document Information:
Title:	Capital structure theory and new technology firms: is there a match?
Author(s):	Susan Coleman, (University of Hartford, West Hartford, Connecticut, USA), Alicia Robb, (Kauffman Foundation, Kansas City, Missouri, USA)
Citation:	Susan Coleman, Alicia Robb, (2012) "Capital structure theory and new technology firms: is there a match?", Management Research Review, Vol. 35 Iss: 2, pp.106 - 120
Keywords:	Business formation, Capital structure, Financing, Kauffman Firm Survey, Technology led strategy, Technology-based firms, United States of America
Article type:	Research paper
DOI:	10.1108/01409171211195143 (Permanent URL)
Publisher:	Emerald Group Publishing Limited
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.