Are female-led start-ups in Norway at disadvantage of receiving external finance: A capital structure analysis

Abstract

Gender discrimination has gained a lot of attention more recently when it comes to receiving external finance. Despite Norway ranking third in closing the gender gap, statistics from Nordic countries find that male founded firms receive most of the capital allocated to start-ups. Thus, the motivation for this thesis is to explore whether female-led start-ups in Norway are at a disadvantage of receiving external finance according to their capital structure. Firms with similar expected risk and return should be equally appealing to investors. However, previous research has shown that this is not the case, suggesting that gender may explain why we observe this funding gap. By using accounting data from the time period 2010-2020 obtained from The Centre for Corporate Governance (CCGR), this thesis aims to examine how gender affect a start-ups ability to receive external funding. This will be accomplished by examining how male- and female-led start-ups differ in their capital structure in terms of total leverage and short-term leverage, as well as how gender-dominated industries may reverse the relationship. This thesis find that gender does not appear to be an important factor in explaining funding differences. However, contrary to our predictions, we observe that female-led start-ups have a minor advantage in acquiring external funding. Despite this, we cannot draw any definite conclusions from these findings since we do not know if it is a result of discrimination or a self-made decision.