The Importance of Equity Finance for R&D Activity – Are There Differences Between Young and Old Companies?


Müller, Elisabeth ; Zimmermann, Volker


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URL: https://ub-madoc.bib.uni-mannheim.de/1231
URN: urn:nbn:de:bsz:180-madoc-12310
Document Type: Working paper
Year of publication: 2006
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: G 32 O 32 ,
Subject headings (SWD): Deutschland , Forschung und Entwicklung , Klein- und Mittelbetrieb
Abstract: This paper analyzes the importance of equity finance for the R&D activity of small and medium-sized enterprises. We use information on almost 6000 German SMEs from a company survey. Using the intensity of banking competition at the district level as instrument to control for endogeneity, we find that a higher equity ratio is conducive to more R&D for young but not for old companies. Equity may be a constraining factor for young companies which have to rely on the original equity investment of their owners since they have not yet accumulated retained earnings and can relay less on outside financing. The positive influence is found for R&D intensity but not for the decision whether to perform R&D. Equity financing is therefore especially important for the most innovative, young companies.
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Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




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Müller, Elisabeth ; Zimmermann, Volker (2006) The Importance of Equity Finance for R&D Activity – Are There Differences Between Young and Old Companies? Open Access [Working paper]
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