Owner-Managed UK Corporate Start-Ups : An Exploratory Study of Financing and Failure

After highlighting the importance of small companies to the UK economy, new archival evidence is provided from an exploratory study which investigates the financing and failure of 21,147 UK single owner-managed (OM) corporate start-ups. Relative to comparable US survey evidence, UK OM corporate start-ups rely very heavily on debt financing from inception, with minimal equity being injected by owners and with retained earnings making only a modest contribution to initial financing. Financial gearing is found to be an important determinant of failure after controlling for company-specific and owner characteristics.Interestingly, the results indicate that foreign-owned company start-ups are less failure prone. Based on the empirical findings of the study and that of extant research, a number of suggested avenues for future research are discussed