Patents as quality signals? The implications for financing constraints on R&D


Czarnitzki, Dirk ; Hall, Bronwyn H. ; Hottenrott, Hanna


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URL: https://ub-madoc.bib.uni-mannheim.de/36631
URN: urn:nbn:de:bsz:180-madoc-366314
Document Type: Working paper
Year of publication: 2014
The title of a journal, publication series: ZEW Discussion Papers
Volume: 14-023
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: O31 , O32 , O38,
Keywords (English): Patents , quality signal , research and development , financial constraints , innovation policy
Abstract: Information about the success of a new technology is usually held asymmetrically between the research and development (R&D)-performing firm and potential lenders and investors. This raises the cost of capital for financing R&D externally, resulting in financing constraints on R&D especially for firms with limited internal resources. Previous literature provided evidence for start-up firms on the role of patents as signals to investors, in particular to Venture Capitalists. This study adds to previous insights by studying the effects of firms’ patenting activity on the degree of financing constraints on R&D for a panel of established firms. The results show that patents do indeed attenuate financing constraints for small firms where information asymmetries may be particularly high and collateral value is low. Larger firms are not only less subject to financing constraints, but also do not seem to benefit from a patent quality signal.

Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




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Czarnitzki, Dirk ; Hall, Bronwyn H. ; Hottenrott, Hanna (2014) Patents as quality signals? The implications for financing constraints on R&D. Open Access ZEW Discussion Papers Mannheim 14-023 [Working paper]
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