Information asymmetry is an important reason that causes external financing constraints. Because reputation has the function of signal transmission, a better reputation of an entrepreneur can reduce the degree of the firm information asymmetry and alleviate financing constraints of the firm. Based on the grouped sample of 94 listed companies of China from 2007 to 2009, this paper did empirical study on the relationship between entrepreneur’s reputation and financing constraints. The results show that entrepreneur’s reputation has a significant effect on firm financing activity. In other words, higher entrepreneur’s reputation leads to lower financing constraints. This study has a significant impact in helping managers and investors realize the importance of signaling effect of a good reputation in capital market. Meanwhile, it helps motivate entrepreneurs to establish good reputation, increasing the efficiency of capital market.
Min, Zhang and Yanxi, Li, "An Empirical Study on the Relationship between Entrepreneur’s Reputation and Financing Constraints" (2013). WHICEB 2013 Proceedings. 110.