Firm Listing Status, Firm Size, and the Financing of Investment

How do companies finance their investments? We examine the financing of investments according to firms' listing status, their size, and the nature of the investments. We show that private firms rely more on bank credit than public firms and less on financial debt, equity, and cash flow. We also show that the contribution of financial debt and equity increases with firm size. Considering both dimensions, we always find an increasing contribution of other financial debt and equity with firm size in both populations. Therefore, even in a bank-based economy, equity plays an important role in the investment of larger private firms.