Debt Management by Companies Entering the Unlisted Securities Market

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Abstract
Using data drawn from the quotation of firms on UK secondary equity markets between November 1980 and March 1985, the paper examines the debt position and debt behaviour of such crucial firms at this critical point in their existence. It is concluded that newly-quoted firms are financially imbalanced at their quotation, but that this is only weakly related to their size, industry, growth, riskiness and yields. Clear evidence exists that entrants move towards target debt ratios, but these targets are again only poorly related to characteristics of firms suggested by the finance literature to be of importance in capital structure decisions.