Asia-Pacific Journal of Business (아태비즈니스연구)

KNU The Institute of Management & Economy Research (강원대학교 경영경제연구소)
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Equity Financing for Innovation and Firm Value: International Evidence

  • Jin-Young Yang (Department of Global Finance and Banking, Inha University)
  • Received : 2023.11.30
  • Accepted : 2023.12.22
  • Published : 2023.12.31
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Abstract

Purpose - This study investigates the impact of equity financing on the valuation of R&D investments using a sample of firms from 33 countries from 1997 to 2018. Design/methodology/approach - I use a modified version of the valuation regression widely used in the literature. Findings - I find evidence that R&D investments are more highly valued when financed through equity. In contrast, debt financing does not affect the valuation of R&D investments. I also document that the impact of equity financing on R&D investment valuation weakens during the financial crisis. Research implications or Originality - In light of the distinctive characteristics of innovative investment, previous research investigates its relationship with financing. What remains unexamined, however, is how financing choices impact the way investors value innovative investments. This study seeks to bridge this gap in the existing body of research using a sample of firms from 33 countries from 1997 to 2018, for 22 years.

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Acknowledgement

This work was supported by INHA UNIVERSITY Research Grant.

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