Ghent University Academic Bibliography

Advanced

Pecking order and debt capacity considerations for high-growth companies seeking financing

Tom Vanacker UGent and Sophie Manigart UGent (2010) SMALL BUSINESS ECONOMICS. 35(1). p.53-69
abstract
This paper examines incremental financing decisions within high-growth businesses. A large longitudinal dataset, free of survivorship bias, to cover financing events of high-growth businesses for up to 8 years is analyzed. The empirical evidence shows that profitable businesses prefer to finance investments with retained earnings, even if they have unused debt capacity. External equity is particularly important for unprofitable businesses with high debt levels, limited cash flows, high risk of failure or significant investments in intangible assets. These findings are consistent with the extended pecking order theory controlling for constraints imposed by debt capacity. It suggests that new equity issues are particularly important to allow high-growth businesses to grow beyond their debt capacity.
Please use this url to cite or link to this publication:
author
organization
year
type
journalArticle (original)
publication status
published
subject
keyword
Financing decisions, Pecking order theory, Debt capacity, CAPITAL STRUCTURE CHOICE, SMALL FIRMS, START-UPS, INVESTMENT, DETERMINANTS, EQUITY, PANEL, PERFORMANCE, DECISIONS, Growth, SELECTION
journal title
SMALL BUSINESS ECONOMICS
Small Bus. Econ. Group
volume
35
issue
1
pages
53 - 69
Web of Science type
Article
Web of Science id
000279036400004
JCR category
ECONOMICS
JCR impact factor
1.555 (2010)
JCR rank
63/301 (2010)
JCR quartile
1 (2010)
ISSN
0921-898X
DOI
10.1007/s11187-008-9150-x
language
English
UGent publication?
yes
classification
A1
copyright statement
I have transferred the copyright for this publication to the publisher
id
1015370
handle
http://hdl.handle.net/1854/LU-1015370
date created
2010-07-29 14:59:39
date last changed
2011-02-18 14:31:57
@article{1015370,
  abstract     = {This paper examines incremental financing decisions within high-growth businesses. A large longitudinal dataset, free of survivorship bias, to cover financing events of high-growth businesses for up to 8 years is analyzed. The empirical evidence shows that profitable businesses prefer to finance investments with retained earnings, even if they have unused debt capacity. External equity is particularly important for unprofitable businesses with high debt levels, limited cash flows, high risk of failure or significant investments in intangible assets. These findings are consistent with the extended pecking order theory controlling for constraints imposed by debt capacity. It suggests that new equity issues are particularly important to allow high-growth businesses to grow beyond their debt capacity.},
  author       = {Vanacker, Tom and Manigart, Sophie},
  issn         = {0921-898X},
  journal      = {SMALL BUSINESS ECONOMICS},
  keyword      = {Financing decisions,Pecking order theory,Debt capacity,CAPITAL STRUCTURE CHOICE,SMALL FIRMS,START-UPS,INVESTMENT,DETERMINANTS,EQUITY,PANEL,PERFORMANCE,DECISIONS,Growth,SELECTION},
  language     = {eng},
  number       = {1},
  pages        = {53--69},
  title        = {Pecking order and debt capacity considerations for high-growth companies seeking financing},
  url          = {http://dx.doi.org/10.1007/s11187-008-9150-x},
  volume       = {35},
  year         = {2010},
}

Chicago
Vanacker, Tom, and Sophie Manigart. 2010. “Pecking Order and Debt Capacity Considerations for High-growth Companies Seeking Financing.” Small Business Economics 35 (1): 53–69.
APA
Vanacker, T., & Manigart, S. (2010). Pecking order and debt capacity considerations for high-growth companies seeking financing. SMALL BUSINESS ECONOMICS, 35(1), 53–69.
Vancouver
1.
Vanacker T, Manigart S. Pecking order and debt capacity considerations for high-growth companies seeking financing. SMALL BUSINESS ECONOMICS. 2010;35(1):53–69.
MLA
Vanacker, Tom, and Sophie Manigart. “Pecking Order and Debt Capacity Considerations for High-growth Companies Seeking Financing.” SMALL BUSINESS ECONOMICS 35.1 (2010): 53–69. Print.