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R&D Investment and Financial Contracting in Spanish Manufacturing Firms
The paper presents a model in which a firm with a degree of research and development (R&D) specialization raises external funds to develop a two-period project that involves some non-verifiable returns. Taking into account a possible opportunistic behavior by the manager, the report indicates that the optimal firms debt equity ratio is negatively related to the firms degree of R&D specialization, its internal funds, and the output generated by the R&D project.
Link
http://www.uib.es/depart/deeweb/seminaris/pdfs/tribo.pdf