The interdependence of R&D activity and debt financing of young firms

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 6217

Classification and Topics

• Classification: Wirtschaft ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill ; Management of Technological Innovation and R&D ; Entrepreneurship
• Subject: innovation financing ; capital structure ; business start-ups ; KfW/ZEW Start-up Panel ; Germany ; Risikokapital ; Unternehmensgründung ; Kapitalstruktur ; Fremdkapital ; Deutschland ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fryges, Helmut ; Kohn, Karsten ; Ullrich, Katrin
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/58446
• URN: urn:nbn:de:101:1-201201113772
• Last update: 10.03.2025, 11:44 AM CET