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An Empirical Investigation on Financing Choice Descendants of Indian Start-ups

Author

Listed:
  • Priyanka Runach

    (Guru Jambheshwar University of Science and Technology)

  • Shubham Garg

    (Guru Jambheshwar University of Science and Technology)

  • Karam Pal Narwal

    (Guru Jambheshwar University of Science and Technology)

Abstract

The primary goal of the study is to examine the factors affecting the financial leverage of unicorn start-ups in India. In order to achieve this goal, the study has employed the panel data techniques on the financial data of 25 start-ups unicorn of India from 2017 to 2021. The study has employed three proxies to measure the financial leverage namely short-run, long-run, and total debt ratio. The result of the study indicates that firm size and profitability are significantly negatively correlated with debt ratios, whilst tangibility, business risk, and firm age are positively and significantly associated. Moreover, short-term debt is found to be more prevalent in unicorn firms when we bifurcate total debt into short and long-term debt. As per the best of author’s knowledge, this is the first research that identified the financial choice of startups. Furthermore, this study provides a pathway for conducting future study in this domain on startup firms’ capital structure decisions. This study has major implications for unicorn managements in taking decisions regarding their finance choice that may lead them to plan adequately their capital structure more efficiently and effectively.

Suggested Citation

  • Priyanka Runach & Shubham Garg & Karam Pal Narwal, 2024. "An Empirical Investigation on Financing Choice Descendants of Indian Start-ups," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 31(4), pages 867-888, December.
    • Handle: RePEc:kap:apfinm:v:31:y:2024:i:4:d:10.1007_s10690-023-09434-7
    DOI: 10.1007/s10690-023-09434-7
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    More about this item

    Keywords

    Capital structure; Financial leverage; Firm factors; India; Unicorns;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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