The interdependence of R&D activity and debt financing of young firms


Fryges, Helmut ; Kohn, Karsten ; Ullrich, Katrin


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URL: https://ub-madoc.bib.uni-mannheim.de/31395
URN: urn:nbn:de:bsz:180-madoc-313959
Document Type: Working paper
Year of publication: 2012
The title of a journal, publication series: ZEW Discussion Papers
Volume: 12-016
Place of publication: Mannheim
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: G32 , O32 , L26,
Subject headings (SWD): Deutschland , Risikokapital , Unternehmensgründung , Kapitalstruktur , Fremdkapital
Keywords (English): innovation financing , capital structure , start-ups , KfW/ZEW Start-up Panel , Germany
Abstract: We investigate the interdependence of debt financing and R&D activities of young firms. Using micro-level data of the KfW/ZEW Start-up Panel, our estimation results show that firm characteristics are more important than personal characteristics of the founders for explaining young firms’ leverage, whereas firm characteristics and human capital of both founders and employees heavily influence R&D intensity. Applying a bivariate Tobit model, we find that there is a positive interdependent relationship between the share of loan financing and R&D intensity. A higher share of loan financing allows for more R&D in young firms and, at the same time, a higher R&D intensity allows for a higher loan share. This relationship cannot be detected by merely estimating single-equation models for R&D intensity and debt financing.

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Fryges, Helmut ; Kohn, Karsten ; Ullrich, Katrin (2012) The interdependence of R&D activity and debt financing of young firms. Open Access ZEW Discussion Papers Mannheim 12-016 [Working paper]
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