Existing studies associates financial constraints among innovators to small, young and high-tech firms. High adjustment cost implies that firms save money by smoothing innovation spending across the business cycle if they have available resources. This paper examines whether previous findings on...

This paper incorporates the cost of adjustment between observed and optimal leverage in explaining the variation in firm's equity or bank-debt financing investments. Using a dynamic adjustment approach identifies the determinants to capital structure between different financial systems. In...