Financing and New Product Decisions of Private and Publicly Traded Firms

Gordon M. Phillips*, Giorgo Sertsios

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

23 Scopus citations


We exploit Medicare national coverage reimbursement approvals as a quasi-natural experiment to investigate how the financing decisions of private and publicly traded firms respond to changes in investment opportunities. We find that publicly traded companies increase their external financing and their subsequent product introductions by more than private companies in response to national coverage approvals. Private equity financing is the primary source of the increased financing for public firms. We show that the stock characteristics of publicly traded firms, such as liquidity and price informativeness, and product market competition are important factors in explaining their financing advantage.

Original languageEnglish
Pages (from-to)1744-1789
Number of pages46
JournalReview of Financial Studies
Issue number5
StatePublished - 1 May 2017

Bibliographical note

Funding Information:
Phillips acknowledges financial support of the National Science Foundation (NSF) through grant #0965328. Sertsios acknowledges the financial support of Fondecyt Proyecto Regular # 1160037.

Publisher Copyright:
© 2016 The Author. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved.


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