Financial dependence and innovation: The case of public versus private firms

Viral Acharya and Zhaoxia Xu

Journal of Financial Economics, 2017, vol. 124, issue 2, 223-243

Abstract: In this paper, we examine the relation between innovation and a firm’s financial dependence using a sample of privately held and publicly traded US firms. We find that public firms in external finance dependent industries spend more on research and development and generate a better patent portfolio than their private counterparts. However, public firms in internal finance dependent industries do not have a better innovation profile than private firms. The results are robust to various empirical strategies that address selection bias. The findings indicate that the influence of public listing on innovation depends on the need for external capital.

Keywords: Private firms; Public firms; Innovation; R&D; Financial dependence (search for similar items in EconPapers)
JEL-codes: G31 G32 O16 O30 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (179)

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Related works:
Working Paper: Financial Dependence and Innovation: The Case of Public versus Private Firms (2014)
Working Paper: Financial Dependence and Innovation: The Case of Public versus Private Firms (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:124:y:2017:i:2:p:223-243

DOI: 10.1016/j.jfineco.2016.02.010

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