Technology and Financial Structure: Are Innovative Firms Different?
AbstractWe use data on publicly traded U.K. firms to investigate whether financing choices differ systematically with R&D intensity. As well as looking at a balance sheet measure of the debt/assets ratio, we also consider the probability of raising finance by issuing new equity, and the shares of bank debt and secured debt in total debt. We find a nonlinear relationship with the debt/assets ratio: firms that report positive but low R&D use more debt finance than firms that report no R&D, but the use of debt finance falls with R&D intensity among those firms that report R&D. We find a simpler relationship with the probability of issuing new equity: Firms that report R&D are more likely to raise funds by issuing shares than firms that report no R&D, and this probability increases with R&D intensity. The shares of bank debt and secured debt in total debt are both lower for firms that report R&D compared to those that do not, and tend to fall as R&D intensity rises. We discuss possible explanations for these patterns.
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Bibliographic InfoPaper provided by Harvard University Department of Economics in its series Scholarly Articles with number 3200323.
Date of creation: 2004
Date of revision:
Publication status: Published in Journal of the European Economic Association
Other versions of this item:
- Philippe Aghion & Stephen Bond & Alexander Klemm & Ioana Marinescu, 2004. "Technology and Financial Structure: Are Innovative Firms Different?," Journal of the European Economic Association, MIT Press, vol. 2(2-3), pages 277-288, 04/05.
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
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