Financial Strategies and Practices of Start-Up Companies at Different Stages of Development

Abstract

This article studies the impact of financing constraints on investment and expenditure of enterprises in different life cycles that are negatively impacted. Previous studies have mostly focused on static analysis of corporate financing, while this article focuses on the dynamic financial performance differences between start-up and growing enterprises in different life cycles. Using panel data from Chinese ChiNext listed companies to measure financing constraints, the stage of the company's lifecycle, and negative impacts. The empirical results also confirm this conclusion, that is, higher information asymmetry and higher financing constraints lead to earlier companies being more sensitive to negative shocks and experiencing greater investment contraction effects. This article intends to use the double difference method to identify causality using exogenous negative shocks at the macro or industry level, examine the heterogeneity of the response of enterprise investment (such as capital expenditure) and operating expenditure (such as research and development investment) to such shocks at different stages among enterprises, and explore the moderating effect of external financing availability. The research found that it is expected to deepen the understanding of the interaction mechanism between the lifecycle of enterprises and financing constraints, and make theoretical contributions to understanding the financial behavior of innovative enterprises in emerging markets.