Financial Dependence and Innovation: The Case of Public versus Private Firms

Viral Acharya

No 9829, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper examines the relationship between innovation and firms' dependence on external capital by analyzing the innovation activities of privately-held and publicly-traded firms We find that public firms in external finance dependent industries generate patents of higher quantity, quality, and novelty compared to their private counterparts, while public firms in internal finance dependent industries do not have a significantly better innovation profile than matched private firms. The results are robust to various empirical strategies that address selection bias. The findings suggest that public listing is beneficial to the innovation of firms in industries with a greater need for external capital.

Keywords: Private firms; Public firms; Innovation; R&d; Finance and growth; Financial constraints (search for similar items in EconPapers)
JEL-codes: G31 G32 O16 O30 (search for similar items in EconPapers)
Date: 2014-02
New Economics Papers: this item is included in nep-cse, nep-ino, nep-knm and nep-tid
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Related works:
Journal Article: Financial dependence and innovation: The case of public versus private firms (2017)
Working Paper: Financial Dependence and Innovation: The Case of Public versus Private Firms (2013)
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