The Economics of Small Business Finance: The Roles of Private Equity and Debt Markets in the Financial Growth Cycle

Berger, Allen N.; Udell, Gregory F.

doi:10.2139/ssrn.137991

Cited by 611 publications

(1,059 citation statements)

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“…Further empirical research suggests that the observable capital structure of firms varies with the age of the firm and their stage of development. Starting with Berger and Udell [1998] a number of studies illustrate the importance of controlling for a firm's life-cycle stage (see e.g. Cole [2008] and Bulan and Yan [2009]).…”

Section: Introductionmentioning

confidence: 99%

Financing Decisions Along a Firm's Life-Cycle: Debt as a Commitment Device

Hirsch

Walz

2009

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractWe analyze the life-cycle patterns of a firm's financing decisions and their interaction with future growth and development decisions. The framework derives three different financing sequences (debt-debt, equity-debt, equity-equity financing) which we link to existing empirical research. Furthermore, by adopting a life-cycle approach we are able to go one step beyond existing empirical research and derive testable hypotheses with respect to differences in the financing decisions of firms due to project, firm, market and country characteristics as well as the impact of a possible lack of start-up financing possibilities on firm dynamics.

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Section: Introductionmentioning

confidence: 99%

Financing Decisions Along a Firm's Life-Cycle: Debt as a Commitment Device

Hirsch

Walz

2009

SSRN Journal

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“…As a consequence, the optimal (or feasible) capital structure typically changes over time, as a firm increases in size and age (Berger and Udell, 1998;Myers, 2001). Due to the high degree of informational opacity and the associated problems of asymmetric information, young and small start-up companies initially rely most on 'insider funds' (i.e., private savings of the business's founder, family members and friends).…”

Section: Article In Pressmentioning

confidence: 99%

The problem of private under-investment in innovation: A policy mind map

Peneder

2008

Technovation

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This paper reviews the major finance-related causes of private under-investment in innovation and the consequent alternative choices for public policy. The focus is on (i) incentive-based arguments that address the problem of limited appropriability of new knowledge, and (ii) the lacking access to external sources of finance caused by imperfections in the capital market. Drawing a policy mind map, which aims to enhance the mutual awareness and coordination of policy makers at the crossroads of technology and corporate finance, the paper is organised along the following chain of thought: (i) causes and rationales, (ii) aims and targets, (iii) critical constraints, and (iv) the main finance-related instruments of innovation policy. r

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“…However banks may prefer not to lend to start-ups and small businesses because of information opacity associated with high agency costs, moral hazard problems and lack of transparency (Berger and Udell, 1998). Outside equity, including informal investment, is often the last and the only available resort to business founders, particularly at early venture stages.…”

Section: Availability Of Debt Financingmentioning

confidence: 99%