Microeconometric Evidence of Financing Frictions and Innovative Activity

Arbeitspapier

Using Dutch data we empirically investigate how financing and innovation vary across firm characteristics. We find that when firms face financial constraints, debt financing and innovation choices are not independent of firm characteristics, and R&D slows down. In the absence of financial constraints, however, as they raise debt, firms become less inclined to innovate and the change in the propensity to innovate no longer varies with firm characteristics. We find that financing constraints faced, propensity to innovate, and R&D intensity are not uniform across firm characteristics. A new "control function" estimator toaccount for heterogeneity and endogeneity has been developed.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 4645

Classification and Topics

• Classification: Wirtschaft ; Corporate Finance and Governance: General ; Innovation; Research and Development; Technological Change; Intellectual Property Rights: General ; Multiple or Simultaneous Equation Models; Multiple Variables: General
• Subject: innovation ; R&D ; capital structure ; financial constraints ; firm characteristics ; correlated random effects ; control function ; expected a posteriori

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Tiwari, Amaresh K. ; Mohnen, Pierre ; Palm, Franz ; van der Loeff, Sybrand Schim
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/93411
• Last update: 10.03.2025, 11:42 AM CET