Evidence on the capability of small technology based firms in Iowa to price and negotiate external capital
Date
1997
Authors
Lu, Tsui-Ling
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Advisor
Van Auken, Howard E.
Committee Member
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Abstract
The study examines the capability of small technology based firms in Iowa to price and negotiate external debt and equity capital using t-statistic to test hypotheses with sample data based on a survey of 142 Iowa small technology based firms. Data analysis provides information on the financing difficulty and potential patterns underlying the capital structure of small firms. The study examines three important aspects of small technology based firms financing: (1) the familiarity of different sources of capital, (2) ability to price and negotiate equity and debt, (3) the differences in ability to price and negotiate debt and equity according to familiarity with capital. The statistical results support all three hypotheses, which state that, (1) owners of technology based firms who are more familiar with alternative forms of capital are better able to negotiate and price external debt, (2) owners of technology based firms who are more familiar with alternative forms of capital are better able to negotiate and price external equity, and (3) owners of technology based firms are better able to price and negotiate external debt and equity in later stages relative to earlier stages.
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thesis