Title: Factors related to the capital structure of small new ventures

Authors: Rainer Harms; Robert J. Breitenecker; Erich J. Schwarz; Malgorzata A. Wdowiak

Addresses: Dutch Institute for Knowledge Intensive Entrepreneurship (NIKOS), University of Twente, 7500 AE Enschede, P.O. Box 217, The Netherlands. ' Department of Innovation Management and Entrepreneurship, Klagenfurt University, Universitaetsstrasse 65-67, 9020 Klagenfurt, Austria. ' Department of Innovation Management and Entrepreneurship, Klagenfurt University, Universitaetsstrasse 65-67, 9020 Klagenfurt, Austria. ' Department of Innovation Management and Entrepreneurship, Klagenfurt University, Universitaetsstrasse 65-67, 9020 Klagenfurt, Austria

Abstract: In the literature, there exists evidence on the capital structure determinants for small ventures, but empirical research for new ventures is limited. We seek to address this gap by presenting a confirmatory analysis of determinants of capital structure of a sample of small new ventures in Austria. An understanding of the determinants of capital structure is vital since a lack of equity can have serious implications for the existence and the prosperity of a new firm. Indicators that relate to the human capital of the founder are easily available and are most prominent in venture financing decisions. Also, the industry chosen and growth intentions can serve as valuable indicators for external investors. Applying ordered logistic regression, influences of the education level, founding experience, leadership experience and turnover on leverage could be detected.

Keywords: capital structure; equity; leverage; small firms; new ventures; start-up financing; human capital; startups; Austria; human capital; venture finance; education levels; founding experience; leadership.

DOI: 10.1504/IJEV.2012.046527

International Journal of Entrepreneurial Venturing, 2012 Vol.4 No.2, pp.97 - 110

Available online: 12 Apr 2012

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