Skip to content
Journal article

The Financial Structure of Startup Firms : The Role of Assets , Information , and Entrepreneur Characteristics

Sanyal P, Mann C ...see all

Research Review, issue december (2010) pp. 35-38

  • 62

    Readers

    Mendeley users who have this article in their library.
  • N/A

    Citations

    Citations of this article.
  • N/A

    Views

    ScienceDirect users who have downloaded this article.
Sign in to save reference

Abstract

Using the Kauffman Firm Survey, we examine how characteristics of a startup's assets, information about the startup, and entrepreneur attributes relate to financial structure at inception. Startups with more physical assets or those where the entrepreneurs have other similar businesses are more likely to use external debt in the financial structure since these assets have a high liquidation value. Startups with human capital embodied in the entrepreneur or intellectual property assets have a lower probability of using debt, consistent with the higher asset specificity and lower collateral value of these assets. Startups characterized as small, unincorporated, solo, first-time, or home-office-based are more likely to be financed by self, family and friends, and importantly through credit cards, as these have both highly specific assets and information opacity. More educated founders and non-African American founders are more likely to be financed by external sources. Controlling for other attributes of the startup, the financial structure of women-owned startups does not differ from that of other startups. Hi-tech startups' financial structure differs significantly from that of startups in other business sectors. ABSTRACT FROM AUTHOR

Author-supplied keywords

  • and richard m
  • asset specificity
  • assistant professor of economics
  • at brandeis university
  • business school at brandeis
  • capital structure
  • catherine l
  • finance in the international
  • g32
  • information opacity
  • jel classifications
  • l26
  • mann is the barbara
  • paroma sanyal is an
  • rosenberg professor of global
  • startup financing

Get free article suggestions today

Mendeley saves you time finding and organizing research

Sign up here
Already have an account ?Sign in

Find this document

Authors

  • Paroma Sanyal

  • Catherine L Mann

Cite this document

Choose a citation style from the tabs below