Large firms rely on debt, small firms on equity for big projects
The study tested different theories on how companies choose to finance big projects. They found that large companies mostly use debt, while small companies prefer new stocks. When firms fund large projects, they change their financial structure, moving away from their usual setup. Small, struggling companies tend to issue new stocks, while firms eventually go back to their original financial setup. This shows that a mix of theories explains how companies manage their finances in the short and long term.