Financial Constraints and Exporting & Innovative Firms

Abstract

This paper studies exporting and innovative firms investment sensitivity to days receivable outstanding, days payable outstanding, and cash flow which are found to be financial factors determining financing constraints. We also advance and test the idea that export intensity and innovation intensity are driving channels of exporting and innovative firms investment potential sensitivity or non-sensitivity to financing constraints. Using Provence-Alpes Côte d'Azur firms level panel data collected between 2005-2014, we find that exporting firms investment is significantly and positively sensitive to cash flow and days receivable outstanding, while that of innovative firms is only significantly sensitive to cash flow. Although jointly export and innovation performances vanish firms investment sensitivity to financing constraints. Moreover, exporting firms export intensity is significantly and positively sensitive to days receivable outstanding while innovative firms innovation intensity is not significantly sensitive to financing constraints. Then, export intensity appears to be a driving channel for exporting firms investment sensitivity to days receivable outstanding while innovation intensity is not a driving channel for innovative firms investment sensitivity to cash flow.