Capital Structure over the Life Cycle

Authors

  • Chase Parker DeHan University of South Carolina, Upstate

Keywords:

Corporate Finance

Abstract

I hypothesize that highly innovative firms — those with high risk, yet higher potential return — will be more likely to raise funds through stock markets than bond markets.  Using the product life-cycle as a theoretical framework, this is all placed within the context of the Trade-Off theory of capital structure.  Empirically, I test this relationship of innovative activity to equity issuance by regressing patent activity (as a proxy for innovation) on the ratio of funds raised through the stock market to total funds raised.  The results are statistically and economically meaningful.

Author Biography

Chase Parker DeHan, University of South Carolina, Upstate

Assistant Professor of Economics and Finance

George Dean Johnson Jr. College of Business and Economics

University of South Carolina, Upstate

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Published

2014-12-31

Issue

Vol. 5 No. 1 (2014)

Section

ABR Journal Articles

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