EconPapers    
Economics at your fingertips  
 

The Importance of Equity Finance for R&D Activity: Are There Differences Between Young and OldCompanies?

Volker Zimmermann and Elisabeth Mueller ()

ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: This paper analyzes the importance of equity finance for the R&D activity of small and medium-sized enterprises. We use information on almost 6000 German SMEs from a company survey. Using the intensity of banking competition at the district level as instrument to control for endogeneity, we find that a higher equity ratio is conducive to more R&D for young but not for old companies. Equity may be a constraining factor for young companies which have to rely on the original equity investment of their owners since they have not yet accumulated retained earnings and can relay less on outside financing. The positive influence is found for R&D intensity but not for the decision whether to perform R&D. Equity financing is therefore especially important for the most innovative, young companies.

Keywords: R&D activity; equity finance; small and medium-sized enterprises (search for similar items in EconPapers)
JEL-codes: O32 G32 (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/24700/1/dp06014.pdf (application/pdf)

Related works:
Working Paper: The importance of equity finance for R&D activity: are there differences between young and oldcompanies? (2008) Downloads
Working Paper: The Importance of Equity Finance for R&D Activity: Are There Differences Between Young and OldCompanies? (2006) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:7186

Access Statistics for this paper

More papers in ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().

 
Page updated 2021-04-03
Handle: RePEc:zbw:zewdip:7186