Dynamic R&D choice and the impact of the firms financial strength


Peters, Bettina ; Roberts, Mark J. ; Vuong, Van Anh


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URL: https://ub-madoc.bib.uni-mannheim.de/40178
URN: urn:nbn:de:bsz:180-madoc-401788
Document Type: Working paper
Year of publication: 2015
The title of a journal, publication series: ZEW Discussion Papers
Volume: 15-083
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: O31 , O32 , G30,
Keywords (English): R&D choice , financial strength , innovation , productivity , dynamic structural model
Abstract: This article investigates how a firm's financial strength affects its dynamic decision to invest in R&D. We estimate a dynamic model of R&D choice using data for German firms in high-tech manufacturing industries. The model incorporates a measure of the firm's financial strength, derived from its credit rating, which is shown to lead to substantial di¤erences in estimates of the costs and expected long-run benefits from R&D investment. Financially strong firms have a higher probability of generating innovations from their R&D investment, and the innovations have a larger impact on productivity and profits. Averaging across all firms, the long run benefit of investing in R&D equals 6.6 percent of firm value. It ranges from 11.6 percent for firms in a strong financial position to 2.3 percent for firms in a weaker financial position.

Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




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Peters, Bettina ; Roberts, Mark J. ; Vuong, Van Anh (2015) Dynamic R&D choice and the impact of the firms financial strength. Open Access ZEW Discussion Papers Mannheim 15-083 [Working paper]
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