• A
  • A
  • A
  • ABC
  • ABC
  • ABC
  • А
  • А
  • А
  • А
  • А
Regular version of the site
National Research University Higher School of EconomicsNewsResearch&ExpertiseHSE Basic Research Programme Publishes 1,000th Working Paper

HSE Basic Research Programme Publishes 1,000th Working Paper

The 1,000th working paper, which came out this November, discusses how innovative companies in the U.S. fund projects. Its authors are Anastasia Stepanova and Maria Kokoreva, research fellows at the HSE Corporate Finance Center, and Kirill Povkh, first-year Master’s student in the Corporate Finance programme.

About HSE working papers

HSE publishes over 30 series of working papers. Some of them are published in Russian through its Publishing House, while others are working papers of the Basic Research Programme (16 series) published in English.

Working papers are the fastest way to present research results and often act as the first step to publishing a paper in English in an international peer-reviewed journal. Working papers of the HSE Basic Research Programme are published online in almost all areas of research carried out at the university, including Economics, Sociology, Management, Law, Psychology, and others.

Publication decisions are made by editors of the working paper series who not only assess the quality of the text but also provide feedback on its contents. This is particularly important for younger researchers who are only starting to write papers in English. Each author can also receive linguistic support from experts at the Academic Writing Centre and proofread the text together with a native English speaker if necessary.

‘We’ve received over 1,500 papers over the seven years of our programme activity, and 1,000 out of them have been selected and published’, said Alexander Balyshev, HSE Director for Basic Research. ‘Our working papers are published as quickly as possible. On average, it takes no more than three weeks between receipt of the application and publication. Our authors include not only research fellows, but also students who receive expert advice and linguistic support’.

Since 2011, all Basic Research Programme working papers have been published on Social Science Research Network (SSRN) – one of the world’s biggest online archives of research and working papers in key areas of social sciences and economics; since 2013, they have also been published on Research Papers in Economics (RеPEс) – a network of online papers in economics. On RеPEс, HSE ranks first in economics among Russian research centres and 62nd among European research centres.

1,000th working paper

The 1,000th working paper came out this November and is dedicated to a study on management of innovative companies in the U.S. Its authors, Anastasia Stepanova and Maria Kokoreva, research fellows at theCorporate Finance Center, as well as Kirill Povkh, a first-year Master’s student in the Corporate Finance programme, started working on this topic last year as part of the project entitled ‘The empirical analysis of corporate financial decisions of innovative companies under conditions of the global transformation to an innovative type of economy’.

‘Nobody knows yet how to effectively manage high-tech companies, and the old techniques work poorly in new areas. At the same time, this needs to be investigated, since the structural changes in the economy over the last decade made the leaders of the IT sector, such as Apple, Google, Facebook, Microsoft, and Amazon the world’s largest companies, replacing banks and oil companies’, Maria Kokoreva notes.

The first question that the researchers addressed was why high-tech companies borrow less often than non-high-tech firms. In the U.S., the proportion of companies raising no debt for financing capital increased from about 8% in 1988 to 30% in 2013. The trend when a significant share of companies avoid debt has been called the ‘zero debt puzzle’. In their paper, the authors demonstrated that this trend is related to the specific characteristics of high-tech companies’ financial behaviour.

What causes high-tech companies to avoid debt? Traditional companies choose zero debt to maximize financial flexibility (opportunities to borrow in the future) or due to executives’ reluctance to take on additional risks. High-tech companies often simply have no opportunity to borrow under acceptable terms. But another reason for avoiding debt, which is an abundance of free cash, which, with the lack of more effective options, is used to repay debt. This mostly relates to successful IT companies. For example, Google, Apple, and Microsoft have 23% of all U.S. cash reserves at their disposal. But this is also characteristic of small high-tech companies. In total, high-tech companies in the U.S. own USD 777 billion, which comprises 46% of all cash reserves.

‘Our next step is to determine how make other financial decisions can be made effectively in high-tech companies’, Anastasia Stepanova said. ‘How much should high-tech companies’ shareholders be paid in dividends? Who should the board include to make quick decisions on innovation? How do large funds that buy shares in high-tech companies impact their efficiency? We are trying to find the answers to these questions’.