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Financial Constraint and R&D Investment: Evidence from CIS

In: Determinants of Innovative Behaviour

Author

Listed:
  • Amaresh K. Tiwari
  • Pierre Mohnen
  • Franz C. Palm
  • Sybrand Schim Loeff

Abstract

The connection between finance and investment starts with any violation of the Modigliani-Miller theorem (Modigliani and Miller, 1958), usually modelled formally via imperfect information. According to Ross, Westerfield and Jordan (1993) about 80 per cent of all financing is done with internally generated funds. Explanations for this behaviour usually highlight the role of information asymmetries (Myers and Majluf, 1984) and agency issues ( Jensen and Meckling, 1976) in raising the costs of external funds.

Suggested Citation

  • Amaresh K. Tiwari & Pierre Mohnen & Franz C. Palm & Sybrand Schim Loeff, 2008. "Financial Constraint and R&D Investment: Evidence from CIS," Palgrave Macmillan Books, in: Cees Beers & Alfred Kleinknecht & Roland Ortt & Robert Verburg (ed.), Determinants of Innovative Behaviour, chapter 10, pages 217-242, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-28573-6_10
    DOI: 10.1057/9780230285736_10
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Cash Flow; Financial Constraint; Optimal Contract; Link Internal; External Organization;
    All these keywords.

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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