Financial Dependence and Innovation: The Case of Public versus Private Firms

In this paper, we examine the relation between innovation and a firm's financial dependence using a sample of privately-held and publicly-traded U.S. firms. We find that public firms in external finance dependent industries spend more on R&D and generate a better patent portfolio than their private counterparts, while public firms in internal finance dependent industries do not have a better innovation profile than private firms. The results are...