Financial dependence and innovation: The case of public versus private firms

Viral Acharya, Zhaoxia Xu

Research output: Contribution to journalArticle

Abstract

In this paper, we examine the relation between innovation and a firm's financial dependence using a sample of privately held and publicly traded US firms. We find that public firms in external finance dependent industries spend more on research and development and generate a better patent portfolio than their private counterparts. However, public firms in internal finance dependent industries do not have a better innovation profile than private firms. The results are robust to various empirical strategies that address selection bias. The findings indicate that the influence of public listing on innovation depends on the need for external capital.

Original languageEnglish (US)
JournalJournal of Financial Economics
DOIs
StateAccepted/In press - Jul 27 2014

Fingerprint

Innovation
Private firms
Industry
Public firm
Finance
External finance
Selection bias
Patent portfolio

Keywords

  • Financial dependence
  • Innovation
  • Private firms
  • Public firms
  • R&D

ASJC Scopus subject areas

  • Accounting
  • Strategy and Management
  • Economics and Econometrics
  • Finance

Cite this

Financial dependence and innovation : The case of public versus private firms. / Acharya, Viral; Xu, Zhaoxia.

In: Journal of Financial Economics, 27.07.2014.

Research output: Contribution to journalArticle

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