Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
Does Finance Matter for Corporate Innovation?
KTH, School of Architecture and the Built Environment (ABE), Transport and Economics (closed 20110301), Economics (closed 20110301).ORCID iD: 0000-0002-9311-3914
2010 (English)Doctoral thesis, comprehensive summary (Other academic)
Place, publisher, year, edition, pages
Stockholm: KTH , 2010.
National Category
Economics and Business Economics
Identifiers
URN: urn:nbn:se:kth:diva-25249ISBN: 978-91-978692-0-1 OAI: oai:DiVA.org:kth-25249DiVA: diva2:356752
Public defence
2010-10-22, E1, Lindstedtsvägen 3, KTH, Stockholm, 10:10 (English)
Opponent
Supervisors
Note

QC 20101013

Available from: 2010-10-13 Created: 2010-10-13 Last updated: 2017-11-06Bibliographically approved
List of papers
1. Equity financing and innovation: Is Europe different from the United States?
Open this publication in new window or tab >>Equity financing and innovation: Is Europe different from the United States?
2010 (English)In: Journal of Banking & Finance, ISSN 0378-4266, Vol. 34, no 6, 1215-1224 p.Article in journal (Refereed) Published
Abstract [en]

During the mid and late 1990s young, high-tech firms in the U.S. experienced a supply shift in both internal and external equity fueling a finance-driven boom in corporate R&D. This paper examines whether R&D spending in Europe in a similar way was sensitive to fluctuations in the supply of internal and external equity during the late 1990s and early 2000s. I conjecture that U.K. and Continental Europe, due to their different financial systems, differ in terms of equity supply. I estimate dynamic R&D regression models for U.K. and Continental European high-tech firms separately and find significant joint cash-flow effects for newly listed firms in both samples. However, only new firms in the U.K. experienced a joint external equity effect as well. The findings of this paper suggest a channel through which market-based financial systems outperform the bank-based economies of Continental Europe.

Keyword
Financing constraints, R&D, Stock issues, Financial markets
National Category
Economics and Business
Identifiers
urn:nbn:se:kth:diva-25084 (URN)10.1016/j.jbankfin.2009.11.015 (DOI)000277673100009 ()2-s2.0-77950020290 (Scopus ID)
Note
QC 20101008Available from: 2010-10-08 Created: 2010-10-07 Last updated: 2011-01-04Bibliographically approved
2. Do financing constraints matter for R&D?
Open this publication in new window or tab >>Do financing constraints matter for R&D?
2012 (English)In: European Economic Review, ISSN 0014-2921, E-ISSN 1873-572X, Vol. 56, no 8, 1512-1529 p.Article in journal (Refereed) Published
Abstract [en]

Information problems and lack of collateral value should make R&D more susceptible to financing frictions than other investments, yet existing evidence on whether financing constraints limit R&D is decidedly mixed, particularly in the studies of non-U.S. firms. We study a large sample of European firms and also find little evidence of binding finance constraints when we estimate standard investment-cash flow regressions. However, we find strong evidence that the availability of finance matters for R&D once we directly control for: (i) firm efforts to smooth R&D with cash reserves and (ii) firm use of external equity finance. Our study provides a framework for evaluating financing constraints when firms rely extensively on external finance and endogenously manage buffer stocks of liquidity to keep investment smooth, and our findings show that controlling for this smoothing behavior is critical for uncovering the full effect of financing constraints. Our findings also indicate a major role for external equity in financing R&D, highlighting a causal channel through which stock market development and liberalization can promote economic growth by increasing firm-level innovative activity.

Place, publisher, year, edition, pages
Elsevier, 2012
Keyword
Financing innovation; R&D financing constraints; Finance and growth; Stock market development; Value of liquidity
National Category
Economics
Identifiers
urn:nbn:se:kth:diva-178944 (URN)10.1016/j.euroecorev.2012.07.007 (DOI)000311465000003 ()2-s2.0-84866990041 (Scopus ID)
Note

Previous title "Do financing constraints matter for R&D? : New Tests and Evidence".

QC 20151210

Available from: 2015-12-09 Created: 2015-12-09 Last updated: 2017-12-01Bibliographically approved
3. Law, the Nature of Financial Intermediation and Investment
Open this publication in new window or tab >>Law, the Nature of Financial Intermediation and Investment
(English)Article in journal (Other academic) Submitted
Abstract [en]

We study how law and the nature of financial market development impact firm-level investment spending. We argue that legal rules that protect shareholders and therefore increase the availability of external equity finance can have important real effects through a “financing R&D channel”. R&D investment is dependent on the supply of external equity because debt contracts are often unsuitable for financing intangible investment. Usingexogenous variation in access to external equity arising from differences in legal rules across countries, we find a very strong link between external equity finance and investment in R&D at the firm-level. We estimate that firms dependent on external finance at the margin increase long-run R&D investment by $0.50 to $0.60 for each dollar increase in long-run access to external equity. In contrast, access to external equity has little impact on long-run physical investment levels. These findings show that R&D investment is especially sensitive to the particular form of financial intermediation, likely because firms can more readily use debt to contract around weak investor protections when it comes to financing fixed investment. Given the importance of R&D investment for innovation and productivity growth, our study highlights a direct causal channel that can connect legal rules and financial development with firm activities key to economic growth.

National Category
Economics and Business
Identifiers
urn:nbn:se:kth:diva-25246 (URN)
Note
QC 20101013Available from: 2010-10-13 Created: 2010-10-13 Last updated: 2010-10-13Bibliographically approved
4. Financial Factors and Patents
Open this publication in new window or tab >>Financial Factors and Patents
(English)Article in journal (Other academic) Submitted
Abstract [en]

This paper conjectures that equity supply is crucial for firms in order to maintain a smooth patenting profile through time. This hypothesis is tested on Swedish firm-level observations from 1997 to 2005. Patent applications growth in Sweden has been highly volatile in recent years. During the economic downturn, following the burst of the IT-bubble, applications dropped substantially, but results here show that the downturn had little effect on the patenting of high-equity firms. Instead, the entire decline in patent applications is confined to firms with lower levels of equity. This effect is consistent across sectors, firm-size, corporateaffiliation,and human-capital intensity.

Keyword
Financing constraints, Innovation, Intellectual property rights, Firm-level panel data
National Category
Economics and Business
Identifiers
urn:nbn:se:kth:diva-25248 (URN)
Note
QS 2011. QS 20120328Available from: 2010-10-13 Created: 2010-10-13 Last updated: 2012-03-28Bibliographically approved

Open Access in DiVA

Introduction(32 kB)442 downloads
File information
File name FULLTEXT01.pdfFile size 32 kBChecksum SHA-512
bc885ed14e615859f78755121ddd57be6ac4472bfc4877c1a050c1230738d1b78a36784067a1dc07a53279c7eb8a40f8a15d744155d3338b07b20851736d2539
Type fulltextMimetype application/pdf

Authority records BETA

Martinsson, Gustav

Search in DiVA

By author/editor
Martinsson, Gustav
By organisation
Economics (closed 20110301)
Economics and BusinessEconomics

Search outside of DiVA

GoogleGoogle Scholar
Total: 442 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

isbn
urn-nbn

Altmetric score

isbn
urn-nbn
Total: 540 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf