NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Zhaoxia Xu

School of Banking and Finance
UNSW Business School
Sydney NSW Australia 2052

E-Mail: zhaoxia.xu@unsw.edu.au
Institutional Affiliation: UNSW Business School

NBER Working Papers and Publications

July 2020The Sensitivity of Cash Savings to the Cost of Capital
with Viral V. Acharya, Soku Byoun: w27517
We show theoretically and empirically that in the presence of a time-varying cost of capital (COC), firms have a hedging motive to reduce the overall COC over time by saving cash when COC is relatively low. The sensitivity of cash savings to COC is especially pronounced with respect to the cost of equity and for firms with greater correlation between COC and financing needs for future investments. Both financially constrained and unconstrained firms respond to low COC by saving cash out of external capital issuance in excess of current financial needs.
December 2013Financial Dependence and Innovation: The Case of Public versus Private Firms
with Viral V. Acharya: w19708
This paper examines the relationship between innovation and firms' dependence on external capital by analyzing the innovation activities of privately-held and publicly-traded firms. We find that public firms in external finance dependent industries generate patents of higher quantity, quality, and novelty compared to their private counterparts, while public firms in internal finance dependent industries do not have a significantly better innovation profile than matched private firms. The results are robust to various empirical strategies that address selection bias. The findings suggest that public listing is beneficial to the innovation of firms in industries with a greater need for external capital.

Published: Viral Acharya & Zhaoxia Xu, 2017. "Financial dependence and innovation: The case of public versus private firms," Journal of Financial Economics, vol 124(2), pages 223-243. citation courtesy of

 
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