Abstract
Recent empirical studies show that innovative firms heavily rely on debt financing. This paper investigates the relation between debt financing, innovation, and growth in a Schumpeterian growth model in which firms’ dynamic R&D and financing choices are jointly and endogenously determined. The paper demonstrates that while debt hampers innovation by incumbents due to debt overhang, it also stimulates entry, thereby fostering innovation and growth at the aggregate level. The paper also shows that debt financing has large effects on firm entry, firm turnover, and industry structure and evolution. Lastly, it predicts substantial intra-industry variation in leverage and innovation, in line with the empirical evidence.
Originalsprog | Engelsk |
---|---|
Publikationsdato | 2020 |
Antal sider | 58 |
Status | Udgivet - 2020 |
Begivenhed | The 80th Annual Meeting of American Finance Association. AFA 2020 - San Diego, USA Varighed: 3 jan. 2020 → 5 jan. 2020 Konferencens nummer: 80 https://afajof.org/annual-meeting/ |
Konference
Konference | The 80th Annual Meeting of American Finance Association. AFA 2020 |
---|---|
Nummer | 80 |
Land/Område | USA |
By | San Diego |
Periode | 03/01/2020 → 05/01/2020 |
Internetadresse |