Liquidity, Innovation, And Endogenous Growth

Malamud, Semyon; Zucchi, Francesca

doi:10.2139/ssrn.2665177

Cited by 6 publications

(4 citation statements)

References 90 publications

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“…According to Hall and Lerner (2010), large and established firms maintain innovative trajectories through excessive cash hoarding that promotes defensive working capital management. Innovative managers keep a pessimistic approach and strictly secure financial flexibility to manage the financial flow of technology investment (Malamud & Zucchi, 2019; Weng & Söderbom, 2018).…”

Section: Literature Reviewmentioning

confidence: 99%

Corporate innovation and trade credit demand: Evidence from China

et al. 2021

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This study investigates the linkage between trade credit demand and corporate innovation. The estimations are robust to a series of covariates, fixed‐effect, instrumental variable modeling, and the difference‐in‐difference approach. Our findings reveal that the nexus between enterprise innovation and trade credit demand is positive and statistically significant. The said attachment is more visible in private, financially constrained, small, and high‐tech enterprises. The study also found that innovative firms relied heavily on trade‐credit financing after the financial crisis of 2008. Managers should carefully design trade‐credit agreements because operating suppliers have an important role in the enterprises' radical growth activities.

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Section: Literature Reviewmentioning

confidence: 99%

Corporate innovation and trade credit demand: Evidence from China

et al. 2021

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“…The economic growth of a country is not understood unless it is supported by technological development and innovation, in order to gain adaptability by incorporating new techniques and increasing the efficiency of processes [33]. Even in periods of financial restriction, investment in innovation can be a stimulus for companies aimed at reducing production [34].…”

Section: Fundamentals Of Crowdfundingmentioning

confidence: 99%

Key Factors for Project Crowdfunding Success: An Empirical Study

et al. 2020

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Crowdfunding is a response to the financing problem of innovative projects in an environment of severe economic crisis. Its competitive advantage lies in its independence from banking institutions and the distribution of risk among a certain number of funders. Since its inception, the number of successfully completed projects has grown to a point where it has started to suffer a downturn that puts its sustainability at risk. This study concerns this particular period of downturn, in order to identify attributes that characterize it, and to define behavioral stereotypes that may be associated with new projects. On a wide data set from sufficiently contrasted projects, and through the use data mining techniques, we extracted the most influential factors in determining the success or failure of the projects, that will subsequently be grouped together using clustering techniques. Six groups of projects have been identified, each with their own characteristics that define them, two of them clearly guide the projects to success and another one allows the modification its characteristics to move away from failure. This achieved strategy allows us to estimate which potential group would be the result of a new project.By means of crowdfunding, unlike the traditional sale of products, the necessary funds are advanced, which reduces risk and makes the project development possible. The contact is carried out through specific platforms that connect people interested in a particular type of product with entrepreneurs offering them. Otherwise, they would not come into contact, causing unmet needs and unrealized expectations [4]. So, a crowdfunding campaign is considered "successful" when the project reaches the minimum necessary funds (budgeted in advance) and is usually considered "very successful" if the funds reached exceed the budgeted amount.The rise of these platforms has been unquestionable since 2006, when the Sellaband platform was created, aimed at raising funds for musical projects. It was the first online platform with an interface just as it is known nowadays. Since then, its number has not stopped growing; 2011 ended with 348 platforms [5] and 2017 closes with more than 2000 active platforms [6] and a large amount of money raised; Kickstarter, the industry's most popular platform, has accumulated a total revenue of just over $4 Billion [7].Despite this positive data, crowdfunding has not reached maturity, since the failure rate is far from improving over the time. According to a study by Professor Mollick, based on an extensive database of Kickstarter projects between 2009 and 2012, the average success rate during that period was 48.1% [8]. The data that the platform shows in its statistics are even worse, starting with success rates in 2010 and 2011 of 43% and 46% respectively, and finishing with the last couple of years 2015 and 2016 with 36% and 32% success. 2016 stands out as the first year in which there is a recess in the number of projects proposed for funding, 14.5% less than the previous year [9]. The suc...

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“…In contrast, we focus on arrival uncertainty of growth opportunities. Such uncertainty is crucially associated with a firm's ability to make breakthrough on the ongoing products innovation (Malamud and Zucchi (2019)).…”

Section: Empirical Implicationmentioning

confidence: 99%

Corporate investment and financing with uncertain growth opportunities

2020

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This paper develops a continuous-time model of a firm's sequential investments. The firm has an option to expand revenue after the initial investment. However, the timing of exercising the growth option depends not only on the underlying cash flows but also on the uncertainty of the growth opportunity. We show that the uncertainty of growth opportunity has a positive effect on the initial investment. In particular, the investment threshold has a nonmonotonic (U-shaped) relation with the arrival rate of the growth opportunity, in that it starts to decrease and then increase with the arrival rate.The outcome is driven by the tradeoff between benefit and cost of the prospective expansion, and the magnitude of that rests on the level of arrival rate. For optimally levered firm, the financial leverage ratio displays a U-shaped relation with the arrival rate. It is caused by the interaction between future growth uncertainty and debt overhang problem. Furthermore, we show that the optimal leverage, depending on the level of growth uncertainty, may or may not display inverse relation with the growth size. Our results shed valuable light on the empirical implication of testing the existence of debt overhang.

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Liquidity, Innovation, And Endogenous Growth

Cited by 6 publications

References 90 publications

Corporate innovation and trade credit demand: Evidence from China

Corporate innovation and trade credit demand: Evidence from China

Key Factors for Project Crowdfunding Success: An Empirical Study

Corporate investment and financing with uncertain growth opportunities

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