Can Corporate Debt Foster Innovation and Growth?

• 成果类型: Article
• 署名作者: Geelen, Thomas; Hajda, Jakub; Morellec, Erwan
• 署名单位: Copenhagen Business School; Danish Finance Institute; Universite de Montreal; HEC Montreal; Swiss Finance Institute (SFI); Swiss Federal Institutes of Technology Domain; Ecole Polytechnique Federale de Lausanne
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhab129
• 发表日期: 2022
• 页码: 4152
• 关键词: optimal capital structure; AGENCY COSTS; competitive-equilibrium; Investment decisions; BANKRUPTCY CHOICE; finance; FIRMS; RISK; profitability; dividend

摘要

Recent empirical studies have shown that innovative firms heavily rely on debt financing. Debt overhang implies that debt hampers innovation by incumbents. A second effect of debt is that it stimulates innovation by entrants. Using a Schumpeterian growth model with endogenous R&D and financing choices, we demonstrate that this second effect always dominates, so that debt fosters innovation and growth at the aggregate level. Our analysis suggests that the relation between debt and investment is more complex than previously acknowledged and highlights potential limitations of empirical work that solely focuses on incumbents when measuring the effects of debt on investment. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.