English, Article, Journal or magazine article edition: Financial Constraints and the Cyclicality of R&D Investment:Evidence from Slovenia Simona Bovha-Padilla; Joze P. Damijan; Jozef Konings

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Bookmark: http://trove.nla.gov.au/version/16687
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Financial Constraints and the Cyclicality of R&​D Investment:Evidence from Slovenia
Author
  • Simona Bovha-Padilla
  • Joze P. Damijan
  • Jozef Konings
Physical Description
  • preprint
Notes
  • This paper uses firm level data to show how R&​D investment responds to shocks in sales growth in credit constrained firms. A credit constrained firm has to rely on its cash flow and borrowing capacity to survive its short-run liquidity shock when hit by a negative shock. This reduces the possibility for further borrowing in order to invest in non-tangible long term R&​D, hence a negative shock should hit R&​D investments more in firms that are more credit constrained. We find that in financially constrained firms sales growth is positively associated with R&​D investment, suggesting procyclical behavior of R&​D investment in credit constrained firms. In contrast, we find that in firms with no financial constraints R&​D investment is negatively correlated with sales growth, suggesting countercyclical behavior of R&​D, consistent with the Schumpeterian idea of restructuring. Furthermore, we find that the firm level response in R&​D investment to sales growth is stronger in firms that are more financially dependent, such as firms that are no part of a multinational, firms not receiving subsidies or firms with less collateral.
  • R&​D investment, financial constraints, cyclicality
  • RePEc:lic:licosd:23909
Language
  • English
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