Capital Control, Debt Financing and Innovative Activity

Dirk Czarnitzki and Kornelius Kraft

No 04-75, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: The present paper first discusses theoretically the different incentives of manager- versus owner-controlled firms for investment into innovative activity. In addition, the role of debt financing is analyzed. Subsequently the results from an empirical study on the determinants of innovative activity measured by patent applications are presented. A sample of German firms covering 2,793 observations is used, and it turns out that companies with widely held capital stock are more active in innovation, i.e. weakly controlled managers show a higher innovation propensity. However, the higher the leverage the more disciplined the managers are.

Keywords: Innovation; Patents; Corporate Governance; Limited Dependent Variables (search for similar items in EconPapers)
JEL-codes: C25 L11 O31 O32 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Capital control, debt financing and innovative activity (2009)
Working Paper: Capital Control, Debt Financing and Innovative Activity (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:2362

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