TY - JOUR
T1 - Financing innovation and growth
T2 - Cash flow, external equity, and the 1990s r&d boom
AU - Brown, James R.
AU - Fazzari, Steven M.
AU - Petersen, Bruce C.
PY - 2009/2
Y1 - 2009/2
N2 - The financing of R&D provides a potentially important channel to link finance and economic growth, but there is no direct evidence that financial effects are large enough to impact aggregate R&D. U.S. firms finance R&D from volatile sources: cash flow and stock issues. We estimate dynamic R&D models for high-tech firms and find significant effects of cash flow and external equity for young, but not mature, firms. The financial coefficients for young firms are large enough that finance supply shifts can explain most of the dramatic 1990s R&D boom, which implies a significant connection between finance, innovation, and growth.
AB - The financing of R&D provides a potentially important channel to link finance and economic growth, but there is no direct evidence that financial effects are large enough to impact aggregate R&D. U.S. firms finance R&D from volatile sources: cash flow and stock issues. We estimate dynamic R&D models for high-tech firms and find significant effects of cash flow and external equity for young, but not mature, firms. The financial coefficients for young firms are large enough that finance supply shifts can explain most of the dramatic 1990s R&D boom, which implies a significant connection between finance, innovation, and growth.
UR - https://www.scopus.com/pages/publications/58849120945
U2 - 10.1111/j.1540-6261.2008.01431.x
DO - 10.1111/j.1540-6261.2008.01431.x
M3 - Article
AN - SCOPUS:58849120945
SN - 0022-1082
VL - 64
SP - 151
EP - 185
JO - The Journal of Finance
JF - The Journal of Finance
IS - 1
ER -