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Title:The interdependence of R&D activity and debt financing of young firms PDF Logo
Authors:Fryges, Helmut
Kohn, Karsten
Ullrich, Katrin
Issue Date:2011
Series/Report no.:Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6217
Abstract:We investigate the interdependence of debt financing and R&D activities of young firms. Using micro-level data of the KfW/ZEW Start-up Panel, our estimation results show that firm characteristics are more important than personal characteristics of the founders for explaining young firms' leverage, whereas firm characteristics and human capital of both founders and employees heavily influence R&D intensity. 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 relationship cannot be detected by merely estimating single-equation models for R&D intensity and debt financing.
Subjects:innovation financing
capital structure
business start-ups
KfW/ZEW Start-up Panel
Germany
JEL:G32
O32
L26
Persistent Identifier of the first edition:urn:nbn:de:101:1-201201113772
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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