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Finance and R&D Investment: Is there a Debt Overhang Effect on R&D Investment?
KTH, School of Architecture and the Built Environment (ABE), Transport and Economics (closed 20110301), Economics (closed 20110301). KTH, School of Architecture and the Built Environment (ABE), Centres, Centre of Excellence for Science and Innovation Studies, CESIS (closed 20110701).ORCID iD: 0000-0002-9311-3914
2009 (English)Report (Other academic)
Abstract [en]

The motivation of this paper is the rather naive approach to debt as a financing source of R&D investment in the empirical investment literature. I focus on long-term relational debt based onits appealing contractual properties and discover a debt overhang effect for the relationship between additional long-term debt and R&D investment. I augment an error correction accelerator-profit specification to include changes in long-term debt as a transitory determinant of R&D investment as has been done with internal finance previously. Firms with previous period debt levels around 0.60 display a positive relationship between additional long-term debt and R&D investment.

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2009. , 55 p.
Series
CESIS Working Paper Series in Economics and Institutions of Innovation, 174
Keyword [en]
Econometrics, Financial Economics, Financial Markets, R&D, Financing Constraints
National Category
Economics
Identifiers
URN: urn:nbn:se:kth:diva-70058OAI: oai:DiVA.org:kth-70058DiVA: diva2:485799
Note
QC 20120213Available from: 2012-02-13 Created: 2012-01-30 Last updated: 2012-02-13Bibliographically approved

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CESISWP174(753 kB)586 downloads
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Type fulltextMimetype application/pdf

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Martinsson, Gustav
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CiteExportLink to record
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Language
  • de-DE
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  • en-US
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Output format
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