Law, Stock Markets, and InnovationThe Journal of Finance
Publication VersionAccepted Manuscript
AbstractWe study a broad sample of firms across 32 countries and find that strong shareholder protections and better access to stock market financing lead to substantially higher long-run rates of R&D investment, particularly in small firms, but are unimportant for fixed capital investment. Credit market development has a modest impact on fixed investment but no impact on R&D. These findings connect law and stock markets with innovative activities key to economic growth, and show that legal rules and financial developments affecting the availability of external equity financing are particularly important for risky, intangible investments not easily financed with debt.
Copyright OwnerJohn Wiley & Sons, Inc
Citation InformationJames R. Brown, Gustav Martinsson and Bruce C. Petersen. "Law, Stock Markets, and Innovation" The Journal of Finance Vol. 68 Iss. 4 (2013) p. 1517 - 1549
Available at: http://works.bepress.com/james-brown/11/