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Capital control, debt financing and innovative activity

[journal article]

Czarnitzki, Dirk; Kraft, Kornelius

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Please use the following Persistent Identifier (PID) to cite this document:http://nbn-resolving.de/urn:nbn:de:0168-ssoar-290617

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Abstract "The present paper discusses the effects of dispersed versus concentrated capital ownership on investment into innovative activity. While the market for equity capital might exert insufficient control on top managements’ behavior, this weakness may be mitigated by a suitable degree of debt financing. We report the results of an empirical study on the determinants of innovative activity measured by patent applications. Using a large sample of German manufacturing firms, we find that companies with widely held capital stock are more active in innovation, i.e. weakly controlled managers show a higher innovation propensity. However, the higher the leverage the more disciplined the managers behave." [author's abstract]
Keywords innovation; corporate governance
Classification Management Science; Financial Planning, Accountancy
Free Keywords Patents; Limited Dependent Variables
Document language English
Publication Year 2009
Page/Pages p. 372-383
Journal Journal of Economic Behavior & Organization, 71 (2009) 2
DOI http://dx.doi.org/10.1016/j.jebo.2009.03.017
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)