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

  • Martinsson, Gustav

    ()

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

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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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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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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