Publication Type
Conference Proceeding Article
Version
submittedVersion
Publication Date
8-2011
Abstract
Are entrepreneurs liquidity-constrained? We attempt to answer this question by investigating the impact of financial capital on startup survival. The analysis of about 5,000 startups from the Kauffman Firm Survey data shows that, controlling for human capital, having some type of financial capital increases survival chances, supporting the existence of liquidity constraints. Interestingly, however, the effects are not uniform across types of capital: securing loans is associated with higher survival likelihood but receiving equity investments shortens startup longevity. Accounting for the endogeneity in financing using the Inverse Probability Treatment Weighted (IPTW) estimation reveals that the negative effect of equity capital is largely due to selection. Our findings highlight the heterogeneous effects across types of financial capital, each of which works through a different dynamic in influencing entrepreneurial performance such as survival.
Discipline
Entrepreneurial and Small Business Operations | Finance and Financial Management | Strategic Management Policy
Publication
Academy of Management Annual Meeting Proceedings: San Antonio, TX, 2011 August 12-16
Identifier
10.5465/ambpp.2011.65869494
Publisher
Academy of Management
City or Country
Briarcliff Manor, NY
Citation
LEE, Jeongsik and ZHANG, Wei.
Financial capital and startup survival. (2011). Academy of Management Annual Meeting Proceedings: San Antonio, TX, 2011 August 12-16.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/7627
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.5465/ambpp.2011.65869494
Included in
Entrepreneurial and Small Business Operations Commons, Finance and Financial Management Commons, Strategic Management Policy Commons