Entrepreneur Debt Aversion and Financing Decisions: Evidence from COVID-19 Support Programs
Journal
Management Science
Type
journal article
Date Issued
2025
Author(s)
Abstract
An entrepreneur’s negative attitude toward debt (debt aversion) affects the financing decisions of the businesses they run. Controlling for a range of observable traits, firms run by highly debt-averse entrepreneurs are about 10 percentage points less likely to use debt. The same entrepreneurs are also almost 25% less likely to take up government-guaranteed debt during the COVID-19 crisis. These firms show less interest in COVID-19 support policies if they perceive them to involve debt based on experiments randomizing the framing and labeling of otherwise nearly identical hypothetical COVID-19 support policies as debt or grants.
Language
English
Refereed
Yes
Subject(s)
Division(s)
Eprints ID
265097