Technology spillovers, asset redeployability and corporate financial policies

Prior research shows that technology spillovers across firms increase innovation, productivity and value. We study how firms finance their own growth stimulated by technology spillovers from their technological peer firms. We find that greater technology spillovers lead to higher leverage. This is t...

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Bibliographic Details
Published inEuropean financial management : the journal of the European Financial Management Association Vol. 27; no. 4; pp. 555 - 588
Main Authors Kecskés, Ambrus, Nguyen, Phuong‐Anh
Format Journal Article
LanguageEnglish
Published Oxford Blackwell Publishing Ltd 01.09.2021
Subjects
asset redeployability
Assets
Borrowing
capital structure
Companies
cost of debt
Finance
innovation
Innovations
Productivity
R&D
Research & development
Taxation
Technology
technology spillovers
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Summary:Prior research shows that technology spillovers across firms increase innovation, productivity and value. We study how firms finance their own growth stimulated by technology spillovers from their technological peer firms. We find that greater technology spillovers lead to higher leverage. This is the result of technology spillovers increasing asset redeployability, as evidenced by more collateralized borrowing and asset transactions. Borrowing costs also decrease. Exogenous variation in the research and development tax credits of other firms allows us to identify the causal effect of technology spillovers on a given firm.
Bibliography:This paper is based on Nguyen's doctoral dissertation at Virginia Tech defended on September 16, 2015 and promptly published online. We greatly appreciate the comments of an anonymous referee, John Beirne, Viet Anh Dang, François Derrien, John Doukas (the Editor), John Easterwood, Arman Eshraghi, Vidhan Goyal, Johan Hombert, Yi Jiang, Dasol Kim, Leonardo Madureira, Sattar Mansi, Ron Masulis, Adrien Matray, Dino Palazzo, Dimitris Petmezas, Alexander Philipov, Jiaping Qiu, Peter Rosenkranz, Amit Seru, Sarah Qian Wang, Toni Whited and Jin Xu and seminar participants at the 2020 Asian Development Bank Conference, the 2020 Conference on Financial Stability and Sustainability, the 2017 European Financial Management Symposium, the 2017 Financial Management Association Conference, the 2017 Financial Management Association Asia/Pacific Conference, the 2017 Financial Management Association European Conference, the 2017 Northern Finance Association Conference, Manchester Business School, Surrey Business School and Virginia Tech. This study was supported by the Social Sciences and Humanities Research Council of Canada.
ISSN:1354-7798
1468-036X
DOI:10.1111/eufm.12324