A Study on The Impact of Macroeconomic Variables on The Capital Structure of Startups

Abstract: 

This research paper examines how macroeconomic parameters influence the capital structure decisions of startup firms, filling a critical gap in the literature where previous studies have primarily focused on firm-specific variables. While prior research on startup financing has predominantly analyzed firm-specific variables, this study expands the analytical framework by incorporating macroeconomic and company-specific variables to provide a more comprehensive understanding of capital structure decisions. Companies invariably respond to their macroeconomic environment, adjusting strategic decisions based on fluctuations in inflation rates, interest rates, gross domestic product, and unemployment levels, among other economic indicators. Data from three international studies are analyzed to determine the impact of macroeconomic factors on capital structure and assess whether such an influence exists. The main findings of this study elucidate that macroeconomic variables have varying effects on capital structure measurement.