Corporate financing decisions on research and development increases
Journal
Emerging Markets Finance and Trade
Journal Volume
48
Journal Issue
SUPPL. 1
Pages
88-109
Date Issued
2012
Author(s)
Abstract
This paper investigates corporate financing decisions on corporate investment using cases of research and development (R&D) spending. We focus on U.S. firms with large R&D increases in 1986 to 2007, and we find that most firms with increases in R&D outlays use internal funds to finance the projects. R&D increasing firms with ex ante external financing are prone to low book-to-market ratios, indicating that firms choose external funds for their investment needs when the market timing is good. Finally, we find that the market reaction to R&D increases using internal funds is similar to R&D increases using external funds. ? 2012 M.E. Sharpe, Inc. All rights reserved.
Subjects
financing decision
market timing
R&D investment
SDGs
Type
conference paper