Effect of R&D tax credits for SMEs in Japan: a microeconometric analysis focused on liquidity constraints

This article estimates the effect of research and development (R&D) tax credits for small- and medium-sized enterprises (SMEs) by utilizing the propensity score matching method to correct any possible selection bias. This study also examines whether the impact of tax credits differs with firms&#...

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Bibliographic Details
Published inSmall business economics Vol. 42; no. 2; pp. 311 - 327
Main Author Kobayashi, Yohei
Format Journal Article
LanguageEnglish
Published Boston Springer 01.02.2014
Springer US
Springer Nature B.V
Subjects
Bias
Business and Management
Business structures
Calipers
Corporate taxes
Corporations
Economic growth
Economic theory
Entrepreneurship
Estimated taxes
Financial investments
Industrial Organization
Investment tax credits
Labor costs
Liquidity
Management
Manufacturers
Microeconomics
Price elasticity
R&D
Research & development
Research & development expenditures
Selection bias
Small & medium sized enterprises-SME
Studies
Tax credits
Technological innovation
R&D tax credits
L26
O38
Liquidity constraints
H32
Propensity score matching
Small- and medium-sized enterprises
H25
K34
O32
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Summary:This article estimates the effect of research and development (R&D) tax credits for small- and medium-sized enterprises (SMEs) by utilizing the propensity score matching method to correct any possible selection bias. This study also examines whether the impact of tax credits differs with firms' characteristics such as their industry, size, and liquidity constraints. Empirical results show that R&D tax credits induce an increase in SMEs' R&D expenditures. Moreover, we find that the effect of R&D tax credits on liquidity-constrained firms is much greater than on unconstrained firms.
ISSN:0921-898X
1573-0913
DOI:10.1007/s11187-013-9477-9