Technology and financial structure: are innovative firms different?
By Philippe Aghion, Stephen R. Bond, Alexander Klemm, Ioana Marinescu. 2004
249 citations recorded by the source corpus.
We use data on publicly traded U.K. firms to investigate whether financing choices differ systematically with R&D intensity. As well as looking at a balance sheet measure of the debt/assets ratio, we also consider the probability of raising finance by issuing new equity, and the shares of bank debt and secured debt in total debt. We find a nonlinear relationship with the debt/assets ratio: firms that report positive but low R&D use more debt finance than firms that report no R&D, but the use of debt finance falls with R&D intensity among those firms that report R&D. We find a simpler relationship with the probability of issuing new equity: Firms that report R&D are more likely to raise funds by issuing shares than firms that report no R&D, and this probability increases with R&D intensity. The shares of bank debt and secured debt in total debt are both lower for firms that report R&D compared to those that do not, and tend to fall as R&D intensity rises. We discuss possible explanations for these patterns.
Subfields: Accounting, Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/f93e7ab474531f95bcd7695b35411c36c08d3322
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Citations in the corpus
- The Importance of Equity Finance for R&D Activity - are There Differences between Young and Old Companies? (2006, unknown): “Aghion et al. (2004) find higher leverage for listed UK companies with R&D activity together with an decrease in leverage in the R&D intensity.”
- R&D investment, firm performance and moderating role of system and safeguard: Evidence from emerging markets (2020, background): “1988; Aghion et al., 2004; Hillier et al, 2011). Therefore, we expect a negative relationship between tangibility and firm performance. We have measured tangibility as fixed assets over total assets, following Hillier et al. (2011). Claessens et al. (2011) stated that due to greater sensitivity to a”
- The financing of small innovative firms: the Italian case (2009, unknown): “We consider to be explanatory variables the firm’s characteristics that should mainly influence firm financing choices: Blass and Yosha (2003) and Aghion et al. (2004) use similar explanatory variables in running such a type of regression.”