Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94151
Authors: 
Müller, Elisabeth
Zimmermann, Volker
Year of Publication: 
2006
Series/Report no.: 
SFB/TR 15 Discussion Paper 111
Abstract: 
This paper analyzes the importance of equity finance for the R&D activity of small and medium-sized enterprises. We use information on almost 6000 German SMEs from a company survey. Using the intensity of banking competition at the district level as instrument to control for endogeneity, we find that a higher equity ratio is conducive to more R&D for young but not for old companies. Equity may be a constraining factor for young companies which have to rely on the original equity investment of their owners since they have not yet accumulated retained earnings and can relay less on outside financing. The positive influence is found for R&D intensity but not for the decision whether to perform R&D. Equity financing is therefore especially important for the most innovative, young companies.
Subjects: 
R&D activity
equity finance
small and medium-sized enterprises
JEL: 
G32
O32
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.