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Law, Stock Markets, and Innovation
KTH, School of Industrial Engineering and Management (ITM), Centres, Centre of Excellence for Science and Innovation Studies, CESIS. Swedish Institute for Financial Research.ORCID iD: 0000-0002-9311-3914
2013 (English)In: Journal of Finance, ISSN 0022-1082, E-ISSN 1540-6261, Vol. 68, no 4, 1517-1549 p.Article in journal (Refereed) Published
Abstract [en]

We study a broad sample of firms across 32 countries and find that strong shareholder protections and better access to stock market financing lead to substantially higher long-run rates of R&D investment, particularly in small firms, but are unimportant for fixed capital investment. Credit market development has a modest impact on fixed investment but no impact on R&D. These findings connect law and stock markets with innovative activities key to economic growth, and show that legal rules and financial developments affecting the availability of external equity financing are particularly important for risky, intangible investments not easily financed with debt.

Place, publisher, year, edition, pages
Wiley-Blackwell, 2013. Vol. 68, no 4, 1517-1549 p.
Keyword [en]
Financial development, Investor protection, Stock markets, R&D, Innovation, Economic growth
National Category
Economics
Identifiers
URN: urn:nbn:se:kth:diva-178946DOI: 10.1111/jofi.12040ISI: 000321824200009ScopusID: 2-s2.0-84880412183OAI: oai:DiVA.org:kth-178946DiVA: diva2:878505
Note

QC 20151210

Available from: 2015-12-09 Created: 2015-12-09 Last updated: 2015-12-10Bibliographically approved

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Publisher's full textScopushttp://onlinelibrary.wiley.com/doi/10.1111/jofi.12040/full

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ReferencesLink to record
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