Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/148271
Authors: 
Hirsch, Julia
Walz, Uwe
Year of Publication: 
2016
Series/Report no.: 
SAFE Working Paper No. 153
Abstract: 
Little evidence exists on the financing decisions of newly founded firms or on the financing dynamics of these firms over their life cycle. We aim to help filling this gap by investigating the financing dynamics of 2,456 French manufacturing firms founded between 2004 and 2006 through their legally required and reported financial statements. Because we observe significant heterogeneity in the financing decision in the firms' founding year, we focus on analyzing whether these differences widen, persist, or converge by using different convergence concepts. We identify a persistence-cum-convergence pattern. We find the existence of ß-convergence (implying that e.g. firms with lower initial levels of debt accumulate more debt over time) but not of ß-convergence (i.e. we observe an increase in the cross-sectional dispersion of the financing structure). We also show that the dynamics of financing matter for the growth path of the firms.
Subjects: 
financing decisions
life-cycle
firm growth
newly founded firms
JEL: 
D92
G32
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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