The Capital Structure Decisions of New Firms
NBER WORKING PAPER SERIES
THE CAPITAL STRUCTURE DECISIONS OF NEW FIRMS Alicia M. Robb David T. Robinson Working Paper 16272 http://www.nber.org/papers/w16272
NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 August 2010
The authors are grateful to the Kauffman Foundation for generous financial support. Malcolm Baker, Thomas Hellmann, Antoinette Schoar, Ivo Welch, and seminar participants at the Kauffman/Cleveland Federal Reserve Bank Entrepreneurial Finance Conference, the University of Michigan, the Stockholm School of Economics, the Atlanta Fed, and the NBER Summer Institute Entrepreneurship Meetings and the Kauffman/RFS conference on entrepreneurial finance provided helpful comments on previous drafts. Juan Carlos Suarez Serrato provided expert research assistance. The usual disclaimer applies. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications. © 2010 by Alicia M. Robb and David T. Robinson. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source.
The Capital Structure Decisions of New Firms Alicia M. Robb and David T. Robinson NBER Working Paper No. 16272 August 2010 JEL No. G21,G24,L26 ABSTRACT This paper investigates the capital structure choices that firms make in their initial year of operation, using restricted-access data from the Kauffman Firm Survey. Contrary to many accounts of startup activity, the firms in our data rely heavily on external debt sources such as bank financing, and less extensively on friends and family-based funding sources. This fact is robust to numerous controls for
THE CAPITAL STRUCTURE DECISIONS OF NEW FIRMS Alicia M. Robb David T. Robinson Working Paper 16272 http://www.nber.org/papers/w16272
NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 August 2010
The authors are grateful to the Kauffman Foundation for generous financial support. Malcolm Baker, Thomas Hellmann, Antoinette Schoar, Ivo Welch, and seminar participants at the Kauffman/Cleveland Federal Reserve Bank Entrepreneurial Finance Conference, the University of Michigan, the Stockholm School of Economics, the Atlanta Fed, and the NBER Summer Institute Entrepreneurship Meetings and the Kauffman/RFS conference on entrepreneurial finance provided helpful comments on previous drafts. Juan Carlos Suarez Serrato provided expert research assistance. The usual disclaimer applies. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications. © 2010 by Alicia M. Robb and David T. Robinson. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source.
The Capital Structure Decisions of New Firms Alicia M. Robb and David T. Robinson NBER Working Paper No. 16272 August 2010 JEL No. G21,G24,L26 ABSTRACT This paper investigates the capital structure choices that firms make in their initial year of operation, using restricted-access data from the Kauffman Firm Survey. Contrary to many accounts of startup activity, the firms in our data rely heavily on external debt sources such as bank financing, and less extensively on friends and family-based funding sources. This fact is robust to numerous controls for