A comparison of new firm financing by gender: evidence from the Kauffman Firm Survey data

This study uses data from the new Kauffman Firm Survey to explore gender differences in the use of start-up capital and subsequent financial injections by new firms. We find that, consistent with previous studies, women start their businesses with significantly lower levels of financial capital than men. A new finding from this research is that women go on to raise significantly lower amounts of incremental debt and equity in years two and three. These results hold even controlling for a variety of firm and owner characteristics, including the level of initial start-up capital and firm sales. Our findings also reveal that women rely heavily on personal rather than external sources of debt and equity for both start-up capital as well as follow-on investments. Our findings have implications for further research into gender differences in financing sources and strategies and business outcomes.     

Capital structure decision making: A model for family business

Most theoretical and empirical studies of capital structure focus on public corporations. Only a limited number of studies on capital structure have been conducted on small-to-medium size enterprises (SMEs), and this deficiency is particularly evident in investigations into factors that influence funding decisions of family business owners.Theory indicates that there is a complex array of factors that influence SME owner-managers' financing decisions. Recent family business literature suggests that these processes are influenced by firm owners' attitudes toward the utility of debt as a form of funding as moderated by external environmental conditions (e.g., financial and market considerations).A number of other factors have been shown to influence financing decisions including culture; entrepreneurial characteristics; entrepreneurs' prior experiences in capital structure; business goals; business life-cycle issues; preferred ownership structures; views regarding control, debt–equity ratios, and short- vs. long-term debt; age and size of the firm; sources of funding for growth; attitudes toward debt financing; issues relating to independence and control; and perceived risk and attitudes toward personal risk.Although these factors have been identified, until now there does not appear to have been any attempts to develop empirically-based models that show relationships between these factors and family business owners' financing decisions. Utilizing theories derived from divergent disciplines, this study develops an empirically tested structural equation model of financing antecedents of family businesses. Participants of our study involved a random sample of 5000 business owners who were mailed a 250-item Australian Family and Private Business questionnaire developed specifically for this investigation.Notably, our findings reveal that firm size, family control, business planning, and business objectives are significantly associated with debt. Small family businesses and owners who do not have formal planning processes in place tend to rely on family loans as a source of finance. However, family businesses in the service industry (e.g., retailers and wholesalers) are less likely to use family loans as are those owners who are planning to achieve growth through new products or process development. Use of capital and retained profits is likely for family businesses planning to achieve growth through an increase in sales but less is likely for family businesses in the manufacturing sector and lifestyle firms. In addition, debt and family loans are negatively related to capital and retained profits. Equity is a consideration for owners of large businesses, young firms, and owners who plan to achieve growth through increasing profit margins. However, equity is less likely to be a consideration for older family business owners and owners who have a preference for retaining family control.Our findings suggest that the interplay between multiple social, family, and financial factors is complex. In addition, our findings indicate the importance of utilizing theories that also help to explain behavioral factors (e.g., owners' needs to be in control) that affect financial structure decision-making processes. Practitioners and researchers should consider the dynamic interplay among business characteristics (e.g., size or industry), behavioral aspects of business financing (e.g., business objectives), and financial factors (e.g., gearing levels) when working with and researching family enterprises.     

融资结构的财务治理效应研究--以我国上市公司为例

研究分析我国上市公司股权融资和债权融资的财务治理效应发现，目前我国上市公司资产负债比例并不高，同时分布比例也不是很合理，大部分上市公司偏好股权融资，利用债务融资的深度和广度都还不够。没有充分发挥债务融资的优势。这就表明融资契约的财务治理效应的有效发挥需要一定的前提条件：一是要不断完善上市公司的内外部财务治理机制，二是要建立有效的债务契约履行机.     

Do women-owned businesses have equal access to angel capital?

Women-owned businesses are the fastest growing sector of new venture ownership in the United States. Although women's access to, and use of, debt and venture capital financing have been explored, comparatively little is known about women's access to capital from private equity investors. In this paper, we examine the equality of women's access to angel capital. The research suggests that women seek angel financing at rates substantially lower than that of men, but have an equal probability of receiving investment. We also document that women are more likely to seek, and to a lesser extent receive, financing from women angels.     

Financing Small Technology-Based Companies: The Relationship between Familiarity with Capital and Ability to Price and Negotiate Investment

This study examines the financing of small technology-based firms. Specifically, the study investigates the familiarity of owners of small technology-based firms with alternative forms of capital by stage of development and in comparison with their ability to price and negotiate external equity and debt investment. The results indicate that owners are most familiar with traditional sources of capital, somewhat less familiar with capital commonly used to fund growth, and least familiar with government funding initiatives. Owners believe that they are better able to negotiate than to price equity and debt. The perceived ability to negotiate and price externally funded investments increases as the firm matures through the various stages of development.     

SMEs,foreign direct investment and financial constraints: The case of Belgium

This paper explores the problems experienced by small and medium-sized enterprises (SMEs) with international ambitions in gaining access to debt and equity finance for foreign direct investment (FDI) projects. We develop several arguments for why such small businesses are expected to face severe financing constraints for foreign investments and provide an explorative empirical study with both the demand and supply side of FDI finance. We have interviewed thirty-two Belgian SMEs that carry out FDI, five banks and five venture capitalists. Based on the SME discussions, we have composed a questionnaire that was sent to the interviewed SMEs. The information problems and lack of collateral that often characterize international investment, the home bias of financiers and the capital gearing method used by banks to evaluate small firms’ foreign projects give rise to financial constraints for SMEs’ FDI projects. The reported finance gap hinders small firms’ (international) development and leads to suboptimal home and FDI host country development.     

科技型企业负债融资实证研究

科技型企业早已成为我国经济发展中的主要增长点.与一般企业相比,科技型企业由于其自身的高成长性,高风险性,高收益等独特的特征,使其在进行融资时更偏好股权融资,没有有效利用负债融资,发挥负债的治理作用;而有些企业由于负债过多,导致最终破产.因此,调整好负债融资使其有利于科技型企业的发展,已经成为各方关注的问题.通过对我国249家上市科技型企业的资产负债率,长期负债率和流动负债率与公司业绩之间的关系进行研究,得出三个负债率的最优区间,为我国科技型上市公司调整负债融资提供一个依据,进一步促进科技型企业的发展.     

内外融资对企业不同阶段创新投资的异质性效应——基于中国制造业上市公司的数据

根据创新价值链理论，将企业创新活动分为研究阶段（R）与开发阶段（D），探究内外源融资方式对企业不同创新阶段投资的异质性效应，为企业选择创新活动的融资渠道和政府设计精准支持企业创新政策提供参考。基于中国制造业上市公司数据实证研究发现：内源融资对企业研究投资有显著促进效应，对开发投资未产生显著促进作用；债权融资对研究投资和开发投资的作用均不显著；股权融资对研究投资的影响不显著，但对开发投资具有显著影响。内源融资对债权融资与研究投资、债权融资与开发投资的关系不具有调节效应；内源融资对股权融资与研究投资关系具有正向显著调节效应，对股权融资与开发投资的关系具有正向调整作用但不显著。     

Limiting Laissez Faire Profits: The Financial Implications

Traditional corporate finance endorses the principle of stockholder wealth maximization as the purpose of business. In light of recent scandals and legislation, businesses are increasingly expected to use financial resources in a manner which benefits society and not just the owners of the firm. This imputation of a corporate soul will necessarily reduce investor returns, which has at least two major financial implications for the firm and the economy. The first is that it may cause investors to change their required rates of return and thereby change the amount of capital available to firms (in␣particular), and the economy (in general). The second is that it may implicitly replace equity with debt in the capital structure of firms, with all that implies for financing and corporate governance. The purpose of this article is to examine these implications and evaluate their sometimes counterintuitive consequences.     

股权融资偏好亦或过度融资——来自中国上市公司再融资的经验证据

针对目前普遍认为中国上市公司偏好股权融资的观点,重新检验中国上市公司的融资行为,结果发现:如果将短期债务考虑在内,并剔除首次公开募股的影响,中国上市公司不存在股权融资偏好。进一步分析,有足够的证据表明中国上市公司的融资行为表现为典型的过度融资。     

The capital structure and investment decisions of the small owner-managed firm: Some exploratory issues

In the burgeoning literature on small firm financing, the problem of underidentification in respect to the supply of, and demand for, capital has not been fully resolved. In an attempt to progress this issue, the current paper looks at some of the issues influencing the demand for finance in small firms which are owner-managed. The paper is primarily exploratory in nature and argues that a greater emphasis might usefully be placed on the cost of capital dimension in future research into small business financing. In particular, it is suggested that where the objective of an owner-manager is to maintain control of the firm, interdependent investment and financing strategies may be chosen to control the small firms cost of capital. This in turn indicates that the tendency for some small firms to invest sub-optimally and exhibit slower than average growth may not be primarily determined by limitations on their supplies of finance. On the demand side, it may well be that in addition to equity aversion, a suboptimal capital structure decision is made in the form of a reduced demand for debt. In other words, given the level of equity that an owner-manager chooses, debt may not be fully expanded to the capacity limit consistent with value maximisation.     

Corporate environmental performance and financing decisions

We investigate the financing strategies of environmentally responsible firms to understand how they set target capital structures and make incremental financing decisions. Literature shows that firms with better environmental performance have lower risk and better access to financing. However, it is not obvious how these firms choose to finance their investments. Using an extensive data set of U.S. firms, we find that firms with superior environmental performance have significantly lower debt ratios and use mostly short‐term debt for temporary financing needs. In doing so, environmentally responsible firms are able to achieve more tax savings and experience lower costs of financial distress. Our results provide new empirical facts about environmental performance and financing decisions, and they help explain the observed relationship between environmental performance and economic performance.     

Internal vs External Financing of R&D

The empirical evidence suggests that while small firms in United States, United Kingdom and Canada rely on internal funds for financing R&D, similar firms in Japan, Germany and France have access to bank loans. In this paper, we analyze the financial decisions of small firms willing to invest in R&D. We find that their high ratio of intangible assets, along with the high risk nature of their investments, can explain their inability to raise debt in external capital markets. We also show that financing R&D with bank loans might be feasible, especially, if banks are willing to monitor the investment activities of their clients.     

Stock listing and financial flexibility

A stock listing usually reflects easy access to external equity financing. Although scant empirical evidence exists on the matter, the literature suggests that the enhanced standing towards creditors - which would result in easier access to debt financing - is an extra advantage of being publicly quoted. This paper tests whether a stock listing leads to more flexibility of debt financing, using a data set of listed and comparably large unlisted companies. The data reveals that listing mainly increases the flexible use of debt financing. The difference between listed and unlisted firms is most apparent when investment opportunities tend to arrive in low-cash-flow states. Furthermore, as the unlisted firms in the dataset are all large consolidating business groups, the results indicate that a group structure does not substitute for listing. The results are robust to different estimation methods.     

Finance for SMEs: A U.K. Perspective

This paper provide an overview of recent trends in the financing of smaller businesses in the U.K. It refers in particular to the findings of a major recent programme of work in this area funded by the Economic and Social Research Council, in which the author participated. This programme included the first national survey to address these issues since the Bolton Report of 1971, as well as a range of projects covering the finance of ethnic businesses and hi-tech firms as well as the market for informal venture capital. On the basis of this work and of the results of more recent follow up surveyors it is concluded that the evidence for general equity or debt gaps in the U.K. is weak. If anything SME funding was too easy in the boom of the late 1980s. It is argued that consideration could be given to the promotion through seedcorn funding of SME co-operative or mutual guarantee schemes to reduce information asymmetry in U.K. credit markets.     

The Provision of Finance to Innovation: A Survey Conducted among Italian Technology-based Small Firms

Financial constraints to the development of innovation are often considered one of the main impediments to high-technology firms seeking to expand and grow. In particular this is the case of small and medium size high-tech firms. In the U.S. and the U.K. a variety of sources of finance are available to the start-ups of innovative firms; in the other European countries, and particularly in Italy, these means are still uncommon so that the development of technology is often prevented. This paper, based on an empirical analysis on a survey of 46 small high-tech Italian firms, aims at exploring the problems experienced by small businesses in gaining access to debt and equity finance. The results highlight that traditional financial sources are inadequate to finance innovative projects. The questioned firms rely mainly on personal finance, and secondly on short term bank debt; they are truly involved in maintaining control over the firm activities and are willing to issue outside equity only if the new investors also provide non financial competencies. Among the 46 interviewed firms, only 10 are willing to be listed in the future on small firms' stock markets.     

Capital Growth,Financing Source and Profitability of Small Businesses: Evidence from Taiwan Small Enterprises

This paper examines the relationship between profitability and financial capital for 1,276 small firms in Taiwan over the period 1992–1997. The results indicate a statistically positive relationship between profitability and capital growth. When financial capital is further divided into debt and equity, the results indicate a significantly positive relationship between profitability and equity financing, but a significantly negative relationship between profitability and debt financing. Moreover, the profitability of small firms is positively related to both the external economic conditions and the firms previous profitability.     

Financing, Regulatory Costs and Entrepreneurial Propensity

In this paper, we compared the availability of different types of financing sources to address the issue of capital availability to entrepreneurial propensity and we scrutinise the influence of business costs by utilising a new composite index using data from the World Bank’s Doing Business Database. The availability of three types of financing sources was analysed: traditional debt financing, venture capital financing, and informal investments. The study’s findings show that only informal investments have statistically significant influence on entrepreneurial propensity. Regulatory business costs were found to deter opportunity driven entrepreneurship, but had no impact on necessity entrepreneurship. Final version accepted on October 2006.     

Compositional Effects of Capital Controls – Theory and Evidence

This paper examines the effects of capital controls on the composition of inter‐national capital flows, paying particular attention to debt inflows versus equity inflows. A two‐period small open economy model with stochastic second‐period output and asymmetric information between domestic agents and international financiers is utilised to generate predictions regarding the effects of capital controls on the relative use of debt versus equity for financing first‐period investment. These capital control implications are then investigated with quarterly frequency panel data for Latin America. Capital controls are found to significantly affect the composition of the capital account.     

The ambitious entrepreneur: High growth strategies of women-owned enterprises

During the last two decades, researchers have sought to develop categories of entrepreneurs and their businesses along a variety of dimensions to better comprehend and analyze the entrepreneurial growth process. Some of this research has focused on differences related to industrial sectors, firm size, the geographical region in which a business is located, the use of high-technology or low-technology, and the life-cycle stage of the firm (i.e., start-up vs. more mature, formalized companies). Researchers have also considered ways in which entrepreneurs can be differentiated from small business managers. One of these classifications is based on the entrepreneur's desire to grow the business rapidly. This is the focus of our study.To date, the media have paid considerable attention to rapidly growing new ventures. However, still lacking are large-scale research studies guided by theory through which we can expand our knowledge of the underlying factors supporting ambitious expansion plans. Some research has identified factors that enhance or reduce the willingness of the entrepreneur to grow the business. Factors include the strategic origin of the business (i.e., the methods and paths through which the firm was founded); previous experience of the founder/owner; and the ability of the entrepreneur to set realistic, measurable goals and to manage conflict effectively.Our study attempted to identify the strategic paths chosen by entrepreneurs and the relation of those paths to the growth orientation of the firm. The entrepreneurs sampled in this study are women entrepreneurs across a wide range of industrial sectors. Recent reviews of entrepreneurship research have suggested the need for more studies comparing high-growth firms with slower-growth firms to better delineate their differences in strategic choices and behaviors.Our study sought to answer the following questions: What characterizes a “high growth-oriented entrepreneur?” Is this distinction associated with specific strategic intentions, prior experience, equity held in previous firms, the type of company structure in place, or success factors the entrepreneur perceives are important to the business? Do “high growth” entrepreneurs show greater entrepreneurial “intensity” (i.e., commitment to the firm's success)? Are they willing to “pay the price” for their own and their firm's success? (i.e., the “opportunity costs” associated with business success and growth). Other relationships under investigation included different patterns of financing the business' start-up and early growth. Do “high-growth” entrepreneurs use unique sources of funding compared with “lower-growth” entrepreneurs?Eight hundred thirty-two entrepreneurs responded to a survey in which they were asked to describe their growth intentions along nineteen strategic dimensions, as well as respond to the foregoing questions. Some of the strategic activity measures included adding a new product or service, expanding operations, selling to a new market, and applying for a loan to expand operations. Actual growth rates based on sales revenues were calculated, and average annualized growth rates of the industrial sectors represented in the sample were obtained. This study showed that high-growth-oriented entrepreneurs were clearly different from low-growth-oriented entrepreneurs along several dimensions. The former were much more likely to select strategies for their firms that permitted greater focus on market expansion and new technologies, to exhibit greater intensity towards business ownership (“my business is the most important activity in my life”), and to be willing to incur greater opportunity costs for the success of their firms (“I would rather own my own business than earn a higher salary while employed by someone else”).The high-growth–oriented entrepreneurs tended to have a more structured approach to organizing their businesses, which suggests a more disciplined perception of managing the firm. In summary, results showed the group of high-growth–oriented entrepreneurs, labeled “ambitious,” as having the following distinctions: strategic intentions that emphasize market growth and technological change, stronger commitment to the success of the business, greater willingness to sacrifice on behalf of the business, earlier planning for the growth of the business, utilization of a team-based form of organization design, concern for reputation and quality, adequate capitalization, strong leadership, and utilization of a wider range of financing sources for the expansion of the venture. The purpose in uncovering these differences is to enable entrepreneurs and researchers to identify more clearly the attributes of rapid-growth ventures and their founders and to move closer to a field-based model of the entrepreneurial growth process which will help delineate the alternative paths to venture growth and organizational change.