Essays on innovation and finance
Δοκίμια στην καινοτομία και την χρηματοδότηση
Innovation is a crucial factor for a country’s competitive position in international markets and a powerful driver for long-run economic growth. The present Thesis comprises of three essays that analyze the role of innovation and sustainability of in firms’ financial performance as well as the effect of capital restrictions on firms’ ability to finance their innovation projects. More specifically, the first essay investigates the role of innovation performance and firms’ recognilability through trademarks in firm’s longevity and IPO underpricing. Based on a sample of 2,275 US IPOs from 1997-2016 the findings that on average the presence of trademarks in a firm’s portfolio increases underpricing, post IPO performance and longevity. The second essay proceeds further by examining the effect of disclosing sustainability information about the environmental, social and governance practices of firms before their IPO on underpricing as well as their post IPO performance. The core statement of the analysis is that sustainability acts as risk mitigation mechanism by reducing asymmetric information. Using a sample of 854 US IPOs from 2008-2017, the findings support that firms which disclose sustainability information on average face less underpricing and is more likely to remain listed in the stock market for longer. Finally, the third easy looks at the constraints of innovation instead. As discussed in previous essays, innovation is important for firms’ performance. However, in presence of capital restrictions firms may face difficulties in performing substantial innovation activity. The third essay, therefore, studies the role of financial restrictions in shaping innovation activity. To unfold the effects of capital controls on R&D, uses a new data set that differentiates between controls on inflows and on outflows as well as among asset categories for 54 developed and developing economies over the period 1995-2013. The findings clearly demonstrate that capital controls are detrimental for R&D activity; however, their overall effect may vary depending on the level of financial development and technology of a country. High level of development in the financial sector smooths out some of the adverse effects of capital restrictions on R&D, while countries with high-tech export orientation could be more sensitive to capital restrictions. Overall, capital controls affect more negatively technologically advanced economies with less developed financial markets. Finally, the choice on whether controls should be imposed on capital inflows or outflows may also have different implications on the innovation activity. Particularly, restrictions on money market and commercial credit are by far the most damaging for innovation.