 Corporate Finance and Comparative AdvantagePeter Egger and Christian Keuschnigg University of St. Gallen Department of Economics working paper series 2009 from Department of Economics, University of St. Gallen Abstract: Innovative firms typically have a high growth potential, need external funds to finance investment, and rely on the key effort and know-how of inside entrepreneurs. Given the limited amount of tangible assets and the non-contractible nature of entrepreneurial effort, these firms are often financially constrained. Access to external funds becomes an important factor in the expansion of innovative industries. This paper models a two sector economy of innovative and standard industries and shows how the pattern of comparative advantage is shaped by factor endowments and variables relating to corporate finance. In particular, a larger equity ratio of young entrepreneurial firms and tough corporate governance standards relax the financing constraints and create a comparative advantage in innovative industries Keywords: Innovative firms; corporate finance; comparative advantage (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:usg:dp2009:2009-04 Access Statistics for this paper More papers in University of St. Gallen Department of Economics working paper series 2009 from Department of Economics, University of St. Gallen Contact information at EDIRC. |
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