International Journal of Business and Social Science Vol. 10 • No. 9 • September 2019 doi:10.30845/ijbss.v10n9p1 1 Elements and Effects of the Corporate Governance on the Capital Structure in University Spin-Offs. Evidences from the Italian Context 1 Luciano D'Amico University of Teramo Via R. Balzarini 1, 64100 Teramo, Italy Christian Corsi University of Teramo Via R. Balzarini 1, 64100 Teramo, Italy Antonio Prencipe 2 University of Teramo Via R. Balzarini 1, 64100 Teramo, Italy Abstract Scholars remark that the funding gap is one of the most problems for the full development of university spin-offs (USOs). Thus, the choices related to the capital structure of USOs have theoretical and practical implication. The paper aims to study the emerging impact of the corporate governance on the capital structure of USOs. In detail, it was assumed that managerial ownership, board size and independent directors can negatively affect the firm’ leverage. Based on a sample of 418 Italian USOs over the period 2010-2014, the findings confirm the hypothesized effects, suggesting the critical role of the corporate governance in the financial issues of USOs. The paper provides new insights, although partial, about the corporate governance and financial dynamics of USOs. Keywords: university spin-offs; capital structure; corporate governance; firm’s leverage; firm ownership; board of directors 1. Introduction In the last years the arguments related to the creation and development of university spin-offs (USOs) have been raised in the literature of technology transfer (Neves and Franco, 2018; Fini et al, 2017; François and Philippart, 2019) Indeed, USOs, chiefly taking the form of new technology-based firms (NTBFs), are an active tool in inspiring the establishment and development of knowledge-based economies (Brem and Borchardt, 2014; Hagedoorn et al, 2018.). Nevertheless, USOs sharing the characteristics of small new technology-based firms (NTBFs) and other high-growth technology firm (Shane, 2004), thus are essentially affected by several forms of market failures, generally in their early stages (Ayoub et al., 2017; Gantenbein and Engelhardt, 2012). This emerging setting reveal the critical funding concerns in the entrepreneurial development process of USOs (Mustar et al., 2008; Sørheim et al., 2011). Indeed, USOs are likely to denote high growth scenarios, but they may deal with troubles in acquiring fundamental funding for the full expansion of their business (Wright et al., 2006). In this regard, the parent universities often can finance simply the expenditures related to legal protections of the technology and knowledge generated, in accordance with their intellectual property rule. But, only a small part of parent organizations has sufficient financial resources to funding the spin-off processes involving the young spin-off firm (Ndonzuau et al., 2002). In light of these arguments, the funding gap is obviously one of the most problems for the successful growth of the entrepreneurial actions of USOs (Oakey, 1995; Reitan, 1997). The choices related to the financial structure assumed by USOs have, thus, theoretical and practical implication (Hoganand and Hutson, 2005; Cassia and Minola, 2011). In this view and in line with the managerial perspective, the modification in the capital structure (Barton and Gordon, 1988) is related, among others, to internal and external dynamics affecting the firm-related risks and control, as we as to the strategic judgments of the management (Brailsford et al., 2002). 1 Although the research has been carried out jointly, paragraphs 2, 4.1 and 5 have been prepared by Luciano D’Amico, paragraphs 1 and 3 by Christian Corsi; paragraph 4.2 by Antonio Prencipe. 2 Corresponding author. E-mail address: aprencipe@unite.it; Tel.: +39 3408017130; Postal address: Università degli Studi di Teramo, Campus di Coste Sant'Agostino, Via R. Balzarini 1, 64100 Teramo (Italy).