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The Interdependence of R&D Activity and Debt Financing of Young Firms†

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  • Helmut Fryges
  • Karsten Kohn
  • Katrin Ullrich

Abstract

We investigate the interdependence of debt financing and & activities of young firms. Applying a bivariate Tobit model, we find that there is a positive interdependent relationship between the share of loan financing and & intensity. A higher share of loan financing allows for more & in young firms and, at the same time, a higher & intensity allows for a higher loan share. This result is mainly driven by start‐ups exhibiting high values of & intensity or leverage. Another remarkable result of our study is that the positive relationship between & and loan financing can only be detected if we consider that, first, the decisions on & and on loan financing are made simultaneously and, second, the decision on & impacts the decision on loan financing and vice versa.

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  • Helmut Fryges & Karsten Kohn & Katrin Ullrich, 2015. "The Interdependence of R&D Activity and Debt Financing of Young Firms†," Journal of Small Business Management, Taylor & Francis Journals, vol. 53(S1), pages 251-277, October.
    • Handle: RePEc:taf:ujbmxx:v:53:y:2015:i:s1:p:251-277
    DOI: 10.1111/jsbm.12187
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    Cited by:

    1. Dawid, Herbert & Riedel, Frank & Steg, Jan-Henrik & Wen, Xingang, 2024. "Cash-constrained R&D Investment," Center for Mathematical Economics Working Papers 699, Center for Mathematical Economics, Bielefeld University.

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