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The Interdependence of R&D Activity and Debt Financing of Young Firms
journal contribution
posted on 2023-05-18, 09:21 authored by Fryges, H, Kohn, K, Ullrich, KWe investigate the interdependence of debt financing and R&D activities of young firms. Applying a bivariate Tobit model, we find that there is a positive interdependent relationship between the share of loan financing and R&D intensity. A higher share of loan financing allows for more R&D in young firms and, at the same time, a higher R&D intensity allows for a higher loan share. This result is mainly driven by start-ups exhibiting high values of R&D intensity or leverage. Another remarkable result of our study is that the positive relationship between R&D and loan financing can only be detected if we consider that, first, the decisions on R&D and on loan financing are made simultaneously and, second, the decision on R&D impacts the decision on loan financing and vice versa.
History
Publication title
Journal of Small Business ManagementVolume
53Issue
S1Pagination
251-277ISSN
0047-2778Department/School
TSBEPublisher
Wiley-Blackwell Publishing, Inc.Place of publication
United StatesRights statement
© 2015 International Council for Small BusinessRepository Status
- Restricted