IDEAS home Printed from https://ideas.repec.org/a/eee/bracre/v56y2024i6s0890838924001914.html
   My bibliography  Save this article

Management control systems, business financial literacy and financial leverage in business-incubated start-ups

Author

Listed:
  • Graña-Alvarez, Roberto
  • Gomez-Conde, Jacobo
  • Lopez-Valeiras, Ernesto
  • González-Loureiro, Miguel

Abstract

Entrepreneurs manage the capital structure of their start-ups to align the assumption of financial risk with their risk appetite. We focus on the ways in which management control systems (MCS), categorized as financial and non-financial MCS, serve as determinants of financial leverage in start-ups. Of particular interest is the influence of entrepreneurs' financial literacy on this relationship. We test these associations on a sample of business-incubated start-ups by combining survey and archival data. Our results show that financial MCS are negatively associated with financial leverage, unlike non-financial MCS, which are positively related. Entrepreneurs’ financial literacy mitigates the impact of these associations. Overall, our aim is to shed light on how start-ups navigate the trade-off between taking risks and controlling their operations. In addition, we add to the growing literature on the adjustment of financial leverage and the role of MCS and financial literacy in managing such leverage.

Suggested Citation

  • Graña-Alvarez, Roberto & Gomez-Conde, Jacobo & Lopez-Valeiras, Ernesto & González-Loureiro, Miguel, 2024. "Management control systems, business financial literacy and financial leverage in business-incubated start-ups," The British Accounting Review, Elsevier, vol. 56(6).
  • Handle: RePEc:eee:bracre:v:56:y:2024:i:6:s0890838924001914
    DOI: 10.1016/j.bar.2024.101427
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0890838924001914
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.bar.2024.101427?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Business financial literacy; Business-incubated start-ups; Financial leverage; Management control systems;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:bracre:v:56:y:2024:i:6:s0890838924001914. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/the-british-accounting-review .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.