Summary
Modeling firms' R&D expenditures often become complicated due to the zero values reported by a significant number of firms. The maximum likelihood (ML) estimation of the Tobit model, which is usually adopted in this case, however, is not robust to heteroscedastic and/or non-normal error structure. Thus, this paper attempts to apply symmetrically trimmed least squares estimation as a semi-parametric estimation of the Tobit model in order to model firms' R&D expenditures with zero values. The result of specification test indicates the semi-parametric estimation outperforms the parametric ML estimation significantly.
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Yoo, SH., Moon, HS. A semi-parametric modeling of firms' R&D expenditures with zero values. Scientometrics 69, 57–67 (2006). https://doi.org/10.1007/s11192-006-0138-5
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DOI: https://doi.org/10.1007/s11192-006-0138-5