Cultural Preferences and Firm Financing Choices

• DOI: 10.1017/s0022109019000103
• Publication Date: 2019-02-11T07:31:10Z
• Authors: Mascia Bedendo; Emilia Garcia-App...; Linus Siming
• Keywords: Debt financing

We document significant differences in the financing structures of small firms with managers diverse cultural backgrounds. To isolate effect culture, we exploit heterogeneity within a geographical area shared regulations, institutions, and macroeconomic cycles. Our findings suggest preference toward debt funding use formal informal sources (bank loans trade credit). results are robust to alternative explanations based on potential credit constraints distribution origins across industries, trading partners, headquarters locations.