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Ownership Structure and R&D Investment of Japanese Start-up Firms

Author

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  • Okamuro, Hiroyuki
  • Zhang, Jian Xiong

Abstract

In this paper, we analyze the influence of ownership structure on the research and development (R&D) investment of start-up firms. Previous studies on the relationship between ownership and R&D have concentrated on the large, established firms listed on the stock market and have focused on the concentration of ownership, regardless of the types of large shareholders. We argue that the type of large shareholders is an important factor in promoting R&D investment under asymmetric information and that R&D projects, particularly those of start-up firms, strongly depend on the financing received from venture capital firms and main banks. Using a unique data set of the Japanese start-up firms in the 1990s, we found that, even after controlling for the innovativeness prior to the venture capital firm or main bank relationship, the shareholding by venture capital firms and main banks have, in fact, positive and significant effects on the R&D investment of start-up firms.

Suggested Citation

  • Okamuro, Hiroyuki & Zhang, Jian Xiong, 2006. "Ownership Structure and R&D Investment of Japanese Start-up Firms," CEI Working Paper Series 2006-1, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hit:hitcei:2006-1
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    File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/13514/1/wp2006-1a.pdf
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    Cited by:

    1. Fabrizi, Simona & Lippert, Steffen & Norback, Pehr-Johan & Persson, Lars, 2007. "Venture Capitalists, Asymmetric Information and Ownership in the Innovation Process," MPRA Paper 6265, University Library of Munich, Germany.
    2. Simona Fabrizi & Steffen Lippert & Pehr-Johan Norbäck & Lars Persson, 2013. "Venture Capitalists and the Patenting of Innovations," Journal of Industrial Economics, Wiley Blackwell, vol. 61(3), pages 623-659, September.

    More about this item

    Keywords

    R&D; Ownership Structure; Start-up Firms; Venture Capital; Main Bank;

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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