File Download
Supplementary

Conference Paper: R&D financing and the boundary and ownership structure of the firm

TitleR&D financing and the boundary and ownership structure of the firm
Authors
Issue Date2005
PublisherThe China Center for Financial Research, Tsinghua University.
Citation
2005 China International Conference in Finance, Kunming, China, 5-7 July 2005. In Proceedings of 2005 China International Conference in Finance, 2005, p. 1-30 How to Cite?
AbstractThis paper analyzes the impact of a firm’s external financial environment and the feature of its investment projects on the firm’s boundary and ownership structure. Our theory highlights the costs of a full ownership over an asset in destroying the owner’s commitment capacity. More specifically, if a firm finances a risky R&D project jointly with other financiers, informational asymmetries and conflicts of interest among co-financiers can be used as a commitment device to stop a bad project when it is discovered; but such a commitment would be lost if a firm choose to own and finance a project. Trading the costs of full ownership with those of a partial ownership through joint financing, which depend on the external financial environment, large firms in a developed financial environment optimally choose to a full ownership of less risky R&D projects. In an underdeveloped financial environment, however, joint ownership is often too costly to be chosen regardless the risk level of R&D projects.
Persistent Identifierhttp://hdl.handle.net/10722/153486

 

DC FieldValueLanguage
dc.contributor.authorHuang, H-
dc.contributor.authorXu, C-
dc.date.accessioned2012-08-07T01:30:18Z-
dc.date.available2012-08-07T01:30:18Z-
dc.date.issued2005-
dc.identifier.citation2005 China International Conference in Finance, Kunming, China, 5-7 July 2005. In Proceedings of 2005 China International Conference in Finance, 2005, p. 1-30-
dc.identifier.urihttp://hdl.handle.net/10722/153486-
dc.description.abstractThis paper analyzes the impact of a firm’s external financial environment and the feature of its investment projects on the firm’s boundary and ownership structure. Our theory highlights the costs of a full ownership over an asset in destroying the owner’s commitment capacity. More specifically, if a firm finances a risky R&D project jointly with other financiers, informational asymmetries and conflicts of interest among co-financiers can be used as a commitment device to stop a bad project when it is discovered; but such a commitment would be lost if a firm choose to own and finance a project. Trading the costs of full ownership with those of a partial ownership through joint financing, which depend on the external financial environment, large firms in a developed financial environment optimally choose to a full ownership of less risky R&D projects. In an underdeveloped financial environment, however, joint ownership is often too costly to be chosen regardless the risk level of R&D projects.-
dc.languageeng-
dc.publisherThe China Center for Financial Research, Tsinghua University.-
dc.relation.ispartofProceedings of 2005 China International Conference in Finance-
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.titleR&D financing and the boundary and ownership structure of the firmen_US
dc.typeConference_Paperen_US
dc.identifier.emailXu, C: cgxu@hku.hk-
dc.description.naturepostprint-
dc.identifier.spage1-
dc.identifier.epage30-
dc.publisher.placeChina-
dc.description.other2005 China International Conference in Finance, Kunming, China, 5-7 July 2005. In Proceedings of 2005 China International Conference in Finance, 2005, p. 1-30-

Export via OAI-PMH Interface in XML Formats


OR


Export to Other Non-XML Formats