Equity Financing and Innovation: is Europe different from the United States?

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Equity Financing and Innovation: is Europe different from the United States?

Author Info

Martinsson, Gustav () (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

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Gustav Martinsson

Abstract

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. I estimate dynamic R&D regression models for high-tech firms, separately for the U.K. and Continental Europe, and find significant cash flow effects for newly listed firms in both samples, but only the new, high-tech firms in the U.K. experienced a supply shift in external equity as well. The findings of this paper suggest a channel through which market based financial systems outperform the bank based economies of Continental Europe.

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Publisher Info
Paper provided by Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies in its series Working Paper Series in Economics and Institutions of Innovation with number 192.

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Length: 29 pages
Date of creation: 26 Aug 2009
Date of revision:
Handle: RePEc:hhs:cesisp:0192

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Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
Phone: +46 8 790 95 63
Web page: http://www.infra.kth.se/cesis/
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Find related papers by JEL classification:
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure
O32 - Economic Development, Technological Change, and Growth - - Technological Change - - - Management of Technological Innovation and R&D

This paper has been announced in the following NEP Reports:

NEP-ALL-2009-08-30 (All new papers)
NEP-EEC-2009-08-30 (European Economics)
NEP-INO-2009-08-30 (Innovation)
NEP-MIC-2009-08-30 (Microeconomics)
NEP-SBM-2009-08-30 (Small Business Management)

References listed on IDEAS
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