Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93411
Authors: 
Tiwari, Amaresh K.
Mohnen, Pierre
Palm, Franz
van der Loeff, Sybrand Schim
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 4645
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 toaccount for heterogeneity and endogeneity has been developed.
Subjects: 
innovation
R&D
capital structure
financial constraints
firm characteristics
correlated random effects
control function
expected a posteriori
JEL: 
G30
O30
C30
Document Type: 
Working Paper

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