Microeconometric evidence of financing frictions and innovative activity - a revision

Tiwari, Amaresh, Mohnen, Pierre, Palm, Franz and Schim van der Loeff, Sybrand (2013). Microeconometric evidence of financing frictions and innovative activity - a revision. UNU-MERIT.

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  • Author Tiwari, Amaresh
    Mohnen, Pierre
    Palm, Franz
    Schim van der Loeff, Sybrand
    Title Microeconometric evidence of financing frictions and innovative activity - a revision
    Publication Date 2013
    Publisher UNU-MERIT
    Abstract 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 to account for heterogeneity and endogeneity has been developed.
    Keyword Innovation
    R&D
    Capital structure
    Financial constraints
    Firm characteristics
    Correlated random effects
    Control function
    Expected a posteriori
    JEL G30
    O30
    C30
    Copyright Holder UNU-MERIT
    Copyright Year 2013
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    Created: Wed, 11 Dec 2013, 17:23:31 JST