A stock listing usually reflects ea

A stock listing usually reflects easy access to external equity. However,
although scant empirical evidence exists on the matter, the literature suggests that the
enhanced standing towards creditors which would result in easier access to debt
financing is an extra advantage of being publicly quoted. This paper tests whether or
not a stock listing leads to more flexibility of debt financing, using a data set of listed
and comparably large unlisted companies. The data reveals that notwithstanding their
size, unlisted firms are not able to substitute internal financing with debt, while listed
firms experience little difficulty on this score. The results are robust for different
estimation methods and are consistent with the view that increasing substitutability
between internally generated funds and debt financing is an important channel
through which a stock listing improves financial flexibility.