Template-type: ReDIF-Paper 1.0
Author-Name: Tiwari, Amaresh K.
Author-Email: A.Tiwari@ulg.ac.be
Author-Workplace-Name: University of Liege
Author-Name: Mohnen, Pierre 
Author-Email: mohnen@merit.unu.edu
Author-Workplace-Name: UNU-MERIT / MGSoG, SBE, Maastricht University, and CIRANO
Author-Name: Palm, Franz
Author-Email: f.palm@maastrichtuniversity.nl
Author-Workplace-Name: SBE, Maastricht University and CESifo
Author-Name: Schim van der Loeff, Sybrand
Author-Email: S.Loeff@maastrichtuniversity.nl
Author-Workplace-Name: SBE, Maastricht University
Title: Microeconometric evidence of financing frictions and innovative activity - a 
	 revision
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.  
Classification-JEL: G30, O30, C30
Keywords: Innovation, R&D, Capital Structure, Financial Constraints, Firm Characteristics,
	 Correlated Random Effects, Control Function, Expected a Posteriori 
Series: UNU-MERIT Working Papers
Creation-Date: 2013
Number: 027
File-URL: http://www.merit.unu.edu/publications/wppdf/2013/wp2013-027.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2013027