題組內容

1. (15 points) Capital structure overlooks that firms have different capital requirements across their life cycle. In addition, the finance literature highlights various theoretical models that explain how the firms' life stages influence capital struc cture decisions, such as the Pecking Order, Trade-Off, and Agency Cost Theories. We like to know how firms in highly innovative industries have' different capital requirements over their life cycle.

(1) (5points) In the beginning of the life cycle, firms are more likely to raise funds through issuing equity or using borrowing, why?