Document Type

Article

Publication Date

2005

Publication Title

Quarterly Journal of Business & Economics

Volume

44

Issue

1/2

Pages

45-54

Abstract

This paper investigates the financing strategies of the R&D firm. Our hypotheses are based on Cho's (1992) game theory model where the firm develops a product but needs additional financing to bring it to market. The model generates a particularly rich set of hypotheses: 1) to fund the completion of its project and bring its product to market, the firm initiates negotiations with an established firm; 2) the majority of the acquisitions will be partial cash acquisitions through private secondary offerings. Confirming the model's hypotheses, we find that the majority of the acquisitions are partial cash acquisitions by significantly larger established R&D firms.

Comments

© Quarterly Journal of Finance and Accounting, formerly Quarterly Journal of Business and Economics.

Posted with the permission of the publisher.

Original Publication Citation

Fogelberg, L., & Griffith, J. M. (2005). Financing strategies of the R&D firm. Quarterly Journal of Business & Economics, 44(1/2), 45-54.

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