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Financing Technological Innovation: Evidence from Patent-Intensive Firms

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Title
Financing Technological Innovation: Evidence from Patent-Intensive Firms
Author
Kim, Taehyun
Issue Date
2019-07
Publisher
ROUTLEDGE JOURNALS
Citation
GLOBAL ECONOMIC REVIEW, v.48, no.3, pp.350 - 362
Abstract
Equityholders of firms with high debt loads have an incentive to underinvest, a distortion that can be most costly for firms with attractive growth options. Using a novel patent-based measure of a firm's growth options, we find that firms issue more equity and shy away from debt financing when they have larger investment opportunities sets. The results are more pronounced among firms in patent-intensive industries. The findings suggest the existence of conflicts of interest between debtholders and equityholders. Our results are consistent with the use of conservative debt policies by technology-intensive firms to mitigate the debt overhang associated with their future growth options.
URI
https://scholarworks.unist.ac.kr/handle/201301/27009
URL
https://www.tandfonline.com/doi/full/10.1080/1226508X.2019.1636702
DOI
10.1080/1226508x.2019.1636702
ISSN
1226-508X
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SBA_Journal Papers
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