Does start-up financing influence start-up speed? Evidence from the panel study of entrepreneurial dynamics

Diana M. Hechavarría*, Charles H. Matthews, Paul D. Reynolds

*Corresponding author for this work

Research output: Contribution to journalArticle

Abstract

Why are some entrepreneurs able to start a new firm more quickly than others in the venture creation process? Drawing on pecking order and agency theory, this study investigates how start-up capital structure influences the time to either new firm founding or quitting the start-up process. The temporal aspect of the start-up process is one that is often discussed, but rarely studied. Therefore, we utilize competing risk and Cox regression event history analysis on a nationally representative sample of US entrepreneurs to investigate how start-up capital structure impacts the time in gestation to particular kinds of start-up outcomes. Our findings suggest that external equity has an appreciable impact on new firm emergence over time, and that the percentage of ownership held by the founders attenuates the benefits of external equity.

Original languageEnglish
Pages (from-to)137-167
Number of pages31
JournalSmall Business Economics
Volume46
Issue number1
Early online date10 Oct 2015
DOIs
Publication statusPublished - 1 Jan 2016

Bibliographical note

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Keywords

  • capital structure
  • event history analysis
  • nascent entrepreneurship
  • new firm founding
  • panel study of entrepreneurial dynamics
  • start-up financing
  • start-up outcomes

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