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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, K
We 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 Management

Volume

53

Issue

S1

Pagination

251-277

ISSN

0047-2778

Department/School

TSBE

Publisher

Wiley-Blackwell Publishing, Inc.

Place of publication

United States

Rights statement

© 2015 International Council for Small Business

Repository Status

  • Restricted

Socio-economic Objectives

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