Essays On Innovation And Capital Structure
This dissertation aims at improving the understanding of the relation between innovation investment, financial constraints and capital structure in the context of emerging economies. Since early 1930s, economists have argued that innovation is essential for firm survival, economic growth and development. An independent strand of the literature demonstrates that innovation by firms is a key driver of economic growth. Meanwhile, people also recognized that innovation investment is difficult to finance in a competitive marketplace due to various factors such as taxes, transaction costs, and especially informational asymmetries with external investors. Therefore, financing of innovation becomes an important managerial and policy challenge. A lot of studies have focused on identifying the financial constraints related to risky R&D and innovation investments. Nevertheless, there is little research highlighting the mechanisms that different external financing sources can affect innovation activities differently. Moreover, the implications of innovation investment for future capital structure decisions have not been fully analyzed. I try to shed light on these issues using micro evidence in the context of emerging markets, where financial markets, political systems and economic systems are different than those in the industrialized economies such as the US. Both of the chapters imply the importance of equity financing on innovation investment in developing countries especially for those young, small and private firms. The finding points to the significance of the private equity market for financing of innovation in the emerging economy context.
dissertation or thesis