Effect of Highly Liquid Current Assets, Economic and Market Environment on Corporate R&D Expenditure
Date Issued
2015
Date
2015
Author(s)
Tai, Yu
Abstract
Over the past few decades, R&D related issues have been few discussed due to the uniqueness and the wide operational diversity of different industries. Different from prior literature, this article comprises a variety of industries to study the determinants of research and development expenditure by using a panel of more than 30,000 firm-years of publicly listed North America firms from 1970 to 2013. The purpose of this study is to examine how highly liquid current assets, economic and market environment affect the amount of research and development expenditure. The primary findings of this article are as follows: (1) Firms holding more highly liquid current assets tend to invest more in research and development expenditure. (2) The relationship between highly liquid current assets and research and development expenditure is stronger during the periods of recession. (3) Firms tend to invest more research and development expenditure as the competition among individual firms increases. (4) The growth of market demand by industry is negatively associated with R&D expenditure. The results remain robust in the sensitivity test. The findings of this article advance our understanding of determinants of research and development expenditure, and provide practical implications to managers during decision-making.
Subjects
Research and Development Expenditure
Determinants
Firm’s Liquidity
Economic Environment
Market Competition
Type
thesis
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ntu-104-R02722011-1.pdf
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