Template-type: ReDIF-Paper 1.0
Author-Name:  Hottenrott H.
Author-Email: hottenrott@zew.de
Author-Workplace-Name: Zentrum für Europäische Wirtschaftsforschung GmbH (ZEW) 
Author-Name: Czarnitzki D. 
Author-Email: Dirk.Czarnitzki@econ.kuleuven.be
Author-Workplace-Name: Katholieke Universiteit Leuven
Author-Name: Hall, B.H. 
Author-Email: hall@merit.unu.edu
Author-Workplace-Name: UNU-MERIT
Title: Patents as quality signals? The implications for financing constraints on R&D
Abstract: Information about the success of a new technology is usually held 
	 asymmetrically between the research and development RD-performing 
	 firm and potential lenders and investors. This raises the cost of 
	 capital for financing RD externally, resulting in financing constraints 
	 on RD especially for firms with limited internal resources. Previous 
	 literature provided evidence for start-up firms on the role of patents 
	 as signals to investors, in particular to Venture Capitalists. This 
	 study adds to previous insights by studying the effects of firms 
	 patenting activity on the degree of financing constraints on RD for a 
	 panel of established firms. The results show that patents do indeed 
	 attenuate financing constraints for small firms where information 
	 asymmetries may be particularly high and collateral value is low. Larger 
	 firms are not only less subject to financing constraints, but also do 
	 not seem to benefit from a patent quality signal.
Classification-JEL: O31, O32, O38
Keywords: Patents, R&D, Research and Development, Financial  Constraints, Innovation,
	 Invention, Innovation Policy
Series: UNU-MERIT Working Papers
Creation-Date: 20140231
Number: 2014-013
File-URL: https://unu-merit.nl/publications/wppdf/2014/wp2014-013.pdf
File-Format: application/pdf
File-Size: 362 Kb
Handle: RePEc:unm:unumer:2014013