Title

An Empirical Investigation of the Growth Cycle Theory of Small Firm Financing

Document Type

Article

Publication Date

10-1-2005

Department

Management and International Business

Abstract

This paper empirically tests the financial growth cycle model for small and medium-sized enterprises (SMEs), which postulates that as firms become larger, older, and more informationally transparent, their financing options become more attractive. We add to the literature by providing one of the first empirical tests of the model using a large, cross-sectional data set. Our results partially support the financial growth cycle model. Specifically, our results show larger firms, as measured by total number of employees, are more likely to use public equity funding or long-term debt as opposed to insider funding.

Publication Title

Journal of Small Business Management

Volume

43

Issue

4

First Page

382

Last Page

392