In this article, we examine how startup firms finance their operations over time. We empirically test the financial growth cycle theory developed by Berger and Udell (1998) using the Kauffman Firm Survey data, the largest longitudinal data set comprised of all U.S. startups launched in 2004....

The main purpose of this study is to simultaneously examine the pecking order and trade-off theories of capital structure and determine which one performs better for a sample of US firms. Our empirical models, which allow the financing coefficient and the rate of adjustment to vary with the...

Most of the previous studies on the firms' debt-equity choice utilize the standard single equation Probit (or logit) model as if firms face a single dichotomous decision to issue debt or equity, but not both. In this study, we examine the factors affecting the choice between internal and...

In this paper, we examine the differences in information asymmetry and financing patterns and a generalized version of the trade-off theory across countries with different institutional environments. We find that firms in Civil law countries have higher information asymmetry, rely more on...

The main purpose of this study is to examine the validity of putting the pecking order and trade-off theories of capital structure in a horse race. Our empirical models, which allow the financing coefficient and the rate of adjustment to vary with the firms' characteristics, provide evidence...

Previous studies that test the tradeoff theory commonly use one of the following debt ratio measures to proxy for a firm's hypothesized optimal ratio: firm's time-series mean leverage, moving average leverage based on a firm's historical debt ratios, industry median leverage, and predicted...