Publication
Title
Founder's financial knowledge and the new firm's ability to obtain debt financing
Author
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.
Language
English
Source (journal)
British journal of management. - Chichester
Publication
Chichester : 2023
ISSN
1045-3172
DOI
10.1111/1467-8551.12766
Volume/pages
(2023) , p. 1-20
ISI
001075354800001
Full text (Publisher's DOI)
Full text (open access)
The author-created version that incorporates referee comments and is the accepted for publication version Available from 29.09.2024
Full text (publisher's version - intranet only)
UAntwerpen
Faculty/Department
Research group
Publication type
Subject
Affiliation
Publications with a UAntwerp address
External links
Web of Science
Record
Identifier
Creation 03.10.2023
Last edited 20.12.2023
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