A Theoretical Model on Relationship between Entrepreneur´s Goal and Capital Structure of New Business

The entrepreneur´s goal is to create a successful business and a significant realizable value for the company. New firms are restricted to sources of capital. Present research show that new firms need an appropriate capital structure matches the entrepreneur´s goal. Theoretical research enlightens that there are many factors to affect capital structure of new firms. In this paper the theoretical model is presented to show the relationship between the entrepreneur´s goal and the capital structure of new firms. Two fundamental factors including growth intent and risk preference are proposed to affect the entrepreneur´s goal and the capital structure of new firms respectively. The affect is described in details by five hypotheses correspondingly. A better understanding of the theoretical model will provide insight into the process and improve the conditions of new firms financing