We model theoretically the optimal capital structure of entrepreneurial firm relying on an endogenous estimation of the return requested by entrepreneurs that compensates for the risk they incur in case of bankruptcy. We estimate the probability according to the Bayesian approach. We also...

Existing research approaches the return on investment expected by entrepreneurs from the perspective of the investor. This paper argues that this perspective is inadequate when applied to entrepreneurs of small and medium sized enterprises (SMEs). In fact, return on equity cannot be ascertained...

We study whether corporate income taxation affects the long-term growth of newly incorporated companies through its effect on their choice of leverage at entry. We find that a decrease in corporate income taxation leads to a sizeable decrease in leverage at entry, and that the distribution of...