Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments October 31, 2019 erstellt
Description:
We examine the usage of debt by small firms trading on the over-the-counter (OTC) market and filing annual reports with the SEC. Similar to firms included in the Survey of Small Business Finance, the small OTC firms in our sample are more dependent on debt financing than firms listed on the NYSE and NASDAQ, despite having high R&D intensity and being smaller, younger and less profitable than NYSE/NASDAQ firms. We find that debt usage increases and debt composition changes as these small OTC firms develop. Specifically, positive sales and positive cash flows mark two milestones of debt financing: Positive sales broaden their access to various segments of the debt market, while positive cash flows deepen their relationships with conventional lenders, such as banks. Our study indicates that debt capital, with its diversified sources and flexible features, supplements equity to finance the development of small firms, even for non-profitable research-intensive ventures