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Capital Control, Debt Financing and Innovative Activity

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  • Czarnitzki, Dirk
  • Kraft, Kornelius

Abstract

The present paper first discusses theoretically the different incentives of manager- versus owner-controlled firms for investment into innovative activity. In addition, the role of debt financing is analyzed. Subsequently the results from an empirical study on the determinants of innovative activity measured by patent applications are presented. A sample of German firms covering 2,793 observations is used, and it turns out that companies with widely held capital stock are more active in innovation, i.e. weakly controlled managers show a higher innovation propensity. However, the higher the leverage the more disciplined the managers are. --

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 04-75.

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Date of creation: 2004
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Handle: RePEc:zbw:zewdip:2362

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Keywords: Innovation; Patents; Corporate Governance; Limited Dependent Variables;

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References

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Citations

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Cited by:
  1. Saibal Ghosh, 2012. "Does R&D intensity influence leverage? Evidence from Indian firm-level data," Journal of International Entrepreneurship, Springer, vol. 10(2), pages 158-175, June.
  2. Zimmermann, Volker & Mueller, Elisabeth, 2007. "The Importance of Equity Finance for R&D Activity: Are There Differences Between Young and OldCompanies?," ZEW Discussion Papers 06-014 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Fryges, Helmut & Kohn, Karsten & Ullrich, Katrin, 2012. "The interdependence of R&D activity and debt financing of young firms," ZEW Discussion Papers 12-016, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Balsmeier, Benjamin & Czarnitzki, Dirk, 2014. "How important is industry-specific managerial experience for innovative firm performance?," ZEW Discussion Papers 14-011, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  5. Dirk Czarnitzki & Hanna Hottenrott, 2011. "R&D investment and financing constraints of small and medium-sized firms," Small Business Economics, Springer, vol. 36(1), pages 65-83, January.
  6. Maaß, Frank & Schröder, Christian & Wolter, Hans-Jürgen, 2013. "Kleine und mittlere Unternehmen der Informations- und Kommunikationswirtschaft in Nordrhein-Westfalen," IfM-Materialien 224, Institut für Mittelstandsforschung (IfM) Bonn.
  7. Jackie Di Vito & Claude Laurin & Yves Bozec, 2008. "Corporate Ownership Structure And Innovation In Canada," Post-Print halshs-00522508, HAL.
  8. Elisabeth Müller & Volker Zimmermann, 2009. "The importance of equity finance for R&D activity," Small Business Economics, Springer, vol. 33(3), pages 303-318, October.
  9. Birgit Aschhoff & Tobias Schmidt, 2008. "Empirical Evidence on the Success of R&D Cooperation—Happy Together?," Review of Industrial Organization, Springer, vol. 33(1), pages 41-62, August.
  10. Nicolas Classen & Martin Carree & Anita Gils & Bettina Peters, 2014. "Innovation in family and non-family SMEs: an exploratory analysis," Small Business Economics, Springer, vol. 42(3), pages 595-609, March.

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