KTH/CESIS Working Paper Series in Economics and Institutions of Innovation
Equity Financing and Innovation: is Europe different from the United States?
Abstract: During the mid and late 1990s young, high-tech firms in
the U.S. experienced a supply shift in both internal and external equity
fueling a finance driven boom in corporate R&D. I estimate dynamic R&D
regression models for high-tech firms, separately for the U.K. and
Continental Europe, and find significant cash flow effects for newly listed
firms in both samples, but only the new, high-tech firms in the U.K.
experienced a supply shift in external equity as well. The findings of this
paper suggest a channel through which market based financial systems
outperform the bank based economies of Continental Europe.
Keywords: Financing constraints; R&D; Stock Issues; Econometrics; Financial markets; international economics; (follow links to similar papers)
JEL-Codes: G32; O32; (follow links to similar papers)
29 pages, August 26, 2009
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