Economic theory identifies two potential informational problems that affect the trade-off between inside and outside financing of business start-ups. On the one hand, firms may self select into certain capital structures based on private information about expected future performance. On the other hand, capital structure may affect the performance because of moral hazard. This paper empirically investigates these relationships by separating self-selection effect from moral hazard effect.
Asinski, Dzmitry and Chyruk, Olena
"CAPITAL STRUCTURE AND PERFORMANCE OF BUSINESS START-UPS: THE ROLE OF UNOBSERVABLE INFORMATION AND INCENTIVES (SUMMARY),"
Frontiers of Entrepreneurship Research: Vol. 26
, Article 2.
Available at: http://digitalknowledge.babson.edu/fer/vol26/iss1/2