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Founder's financial knowledge and the new firm's ability to obtain debt financing

Laurence Rijssegem (UGent) , Ine Paeleman, Egle (Vaznyte) Hünermund and Petra Andries (UGent)
(2024) BRITISH JOURNAL OF MANAGEMENT. 35(3). p.1408-1424
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Abstract
How does a founder's knowledge of debt financing influence his/her new firm's ability to obtain the amount of debt financing it desires? Building on the cognitive psychology literature, we propose that the depth of a founder's debt financing knowledge is positively associated with the new firm's ability to obtain debt financing as he/she will be better at selecting and acquiring relevant sources of debt financing. Integrating insights on entrepreneurial growth‐oriented strategies, we further argue that this relationship will be more pronounced when the new firm internationalizes and innovates more. Using a Heckman full information maximum likelihood model, we analyse survey data on 1845 Flemish new firms. The first stage of the model estimates the new firm's probability of raising debt financing. The second stage tests the relationship between the founder's knowledge depth of debt financing and the new firm's debt financing ability, conditional on the decision to raise debt financing. We find that the founder's knowledge depth of debt financing is positively associated with the new firm's ability to obtain debt financing. This association becomes even more pronounced when the new firm internationalizes more. These findings extend the entrepreneurial finance, entrepreneurial strategy and cognitive psychology literature.
Keywords
entrepreneurial finance, financial knowledge, growth-oriented strategies, innovation, INNOVATION PERFORMANCE, CAPITAL STRUCTURE, FAMILY FIRMS, TRADE CREDIT, ENTREPRENEURIAL, DECISION, GROWTH, INTERNATIONALIZATION, INSIGHTS, STRATEGY

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MLA
Rijssegem, Laurence, et al. “Founder’s Financial Knowledge and the New Firm’s Ability to Obtain Debt Financing.” BRITISH JOURNAL OF MANAGEMENT, vol. 35, no. 3, 2024, pp. 1408–24, doi:10.1111/1467-8551.12766.
APA
Rijssegem, L., Paeleman, I., Hünermund, E. (Vaznyte), & Andries, P. (2024). Founder’s financial knowledge and the new firm’s ability to obtain debt financing. BRITISH JOURNAL OF MANAGEMENT, 35(3), 1408–1424. https://doi.org/10.1111/1467-8551.12766
Chicago author-date
Rijssegem, Laurence, Ine Paeleman, Egle (Vaznyte) Hünermund, and Petra Andries. 2024. “Founder’s Financial Knowledge and the New Firm’s Ability to Obtain Debt Financing.” BRITISH JOURNAL OF MANAGEMENT 35 (3): 1408–24. https://doi.org/10.1111/1467-8551.12766.
Chicago author-date (all authors)
Rijssegem, Laurence, Ine Paeleman, Egle (Vaznyte) Hünermund, and Petra Andries. 2024. “Founder’s Financial Knowledge and the New Firm’s Ability to Obtain Debt Financing.” BRITISH JOURNAL OF MANAGEMENT 35 (3): 1408–1424. doi:10.1111/1467-8551.12766.
Vancouver
1.
Rijssegem L, Paeleman I, Hünermund E (Vaznyte), Andries P. Founder’s financial knowledge and the new firm’s ability to obtain debt financing. BRITISH JOURNAL OF MANAGEMENT. 2024;35(3):1408–24.
IEEE
[1]
L. Rijssegem, I. Paeleman, E. (Vaznyte) Hünermund, and P. Andries, “Founder’s financial knowledge and the new firm’s ability to obtain debt financing,” BRITISH JOURNAL OF MANAGEMENT, vol. 35, no. 3, pp. 1408–1424, 2024.
@article{01HCFRDPT8RSTDSX08CHSY9J1M,
  abstract     = {{How does a founder's knowledge of debt financing influence his/her new firm's ability to obtain the amount of debt financing it desires? Building on the cognitive psychology literature, we propose that the depth of a founder's debt financing knowledge is positively associated with the new firm's ability to obtain debt financing as he/she will be better at selecting and acquiring relevant sources of debt financing. Integrating insights on entrepreneurial growth‐oriented strategies, we further argue that this relationship will be more pronounced when the new firm internationalizes and innovates more. Using a Heckman full information maximum likelihood model, we analyse survey data on 1845 Flemish new firms. The first stage of the model estimates the new firm's probability of raising debt financing. The second stage tests the relationship between the founder's knowledge depth of debt financing and the new firm's debt financing ability, conditional on the decision to raise debt financing. We find that the founder's knowledge depth of debt financing is positively associated with the new firm's ability to obtain debt financing. This association becomes even more pronounced when the new firm internationalizes more. These findings extend the entrepreneurial finance, entrepreneurial strategy and cognitive psychology literature.}},
  author       = {{Rijssegem, Laurence and Paeleman, Ine and Hünermund, Egle (Vaznyte) and Andries, Petra}},
  issn         = {{1045-3172}},
  journal      = {{BRITISH JOURNAL OF MANAGEMENT}},
  keywords     = {{entrepreneurial finance,financial knowledge,growth-oriented strategies,innovation,INNOVATION PERFORMANCE,CAPITAL STRUCTURE,FAMILY FIRMS,TRADE CREDIT,ENTREPRENEURIAL,DECISION,GROWTH,INTERNATIONALIZATION,INSIGHTS,STRATEGY}},
  language     = {{eng}},
  number       = {{3}},
  pages        = {{1408--1424}},
  title        = {{Founder's financial knowledge and the new firm's ability to obtain debt financing}},
  url          = {{http://doi.org/10.1111/1467-8551.12766}},
  volume       = {{35}},
  year         = {{2024}},
}
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