The financing dynamics of newly founded firms
Julia Hirsch and
Uwe Walz ()
No 153, SAFE Working Paper Series from Leibniz Institute for Financial Research SAFE
Abstract:
Little evidence exists on the financing decisions of newly founded firms or on the financing dynamics of these firms over their life cycle. We aim to help filling this gap by investigating the financing dynamics of 2,456 French manufacturing firms founded between 2004 and 2006 through their legally required and reported financial statements. Because we observe significant heterogeneity in the financing decision in the firms' founding year, we focus on analyzing whether these differences widen, persist, or converge by using different convergence concepts. We identify a persistence-cum-convergence pattern. We find the existence of ß-convergence (implying that e.g. firms with lower initial levels of debt accumulate more debt over time) but not of ß-convergence (i.e. we observe an increase in the cross-sectional dispersion of the financing structure). We also show that the dynamics of financing matter for the growth path of the firms.
Keywords: financing decisions; life-cycle; firm growth; newly founded firms (search for similar items in EconPapers)
JEL-codes: D92 G32 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-cfn
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Citations: View citations in EconPapers (1)
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Related works:
Journal Article: The financing dynamics of newly founded firms (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewp:153
DOI: 10.2139/ssrn.2865558
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