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Analysis of innovation based on financial structure

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  • You-hua Chen
  • Pu-yan Nie
  • Xiao-wei Wen

Abstract

This paper examines the interaction between innovation and financial structure under monopoly. We characterise the effects of debt levels on innovative investment by considering a limited liability effect. On one hand, higher debt levels promote both innovative investment and the outputs. On the other hand, shareholders’ net benefits are reduced by higher debt levels and net profit per debt is correspondingly reduced by higher debt level under positive net profit. More importantly, this study captures the interaction between financial structure and industrial organisation without restriction of the interior point.

Suggested Citation

  • You-hua Chen & Pu-yan Nie & Xiao-wei Wen, 2015. "Analysis of innovation based on financial structure," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 28(1), pages 631-640, January.
    • Handle: RePEc:taf:reroxx:v:28:y:2015:i:1:p:631-640
    DOI: 10.1080/1331677X.2015.1087327
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    Cited by:

    1. Yuanyue Wang & Zhaohui Yu & Xiaojing Yi, 2022. "Financing liabilities and inefficient investment of listed companies: Based on the adjustment effect of different financial structures," Australian Economic Papers, Wiley Blackwell, vol. 61(4), pages 848-875, December.

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