Financing constraints and investments in R&amp;D: Evidence from Indian manufacturing firms

Sasidharan, Subash; Lukose, P J Jijo; Komera, Surenderrao

doi:10.1016/j.qref.2014.07.002

Cited by 111 publications

(100 citation statements)

References 66 publications

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“…This implies that about 81% of past R&D behaviour affects the current level of R&D investments. The result is consistent with the R&D smoothing idea and is similar to findings from Sasidharan et al (). The results from Column 1 also confirm our general prediction that emerging market firms do not tend to use external funds to finance R&D, as is evident from the statistically significant negative coefficient for the variable.…”

Section: Resultssupporting

confidence: 92%

Financing behaviour of R&D investment in the emerging markets: the role of alliance and financial system

2017

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This paper examines the financing behaviour of research and development (R&D) investments in emerging markets. Drawing on institutional theory and using panel data of generalized methods of moment estimation for a sample of 302 firms from 20 countries during the period 2003–2015, we find that emerging market firms tend to use internal funds for financing R&D investments. Interesting results emerged when the sample was divided as alliance and non‐alliance firms, and bank‐based and market‐based financial systems. The results show that R&D financing behaves differently for alliance and non‐alliance firms. Alliance firms use both internal and external funds for R&D investments, while non‐alliance firms do not use external funds. We also document that a country's financial system influences the choice of available sources of finance. Firms from countries that follow a bank‐based financial system tend to rely on external funds while firms from countries that follow a market‐based financial system depend more on internal funds for financing R&D investments. This study is important as it provides new evidence on financing R&D investments in emerging countries taking into account the institutional arguments of financing choices, and so should guide stakeholders about appropriate sources of R&D financing.

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Section: Resultssupporting

confidence: 92%

Financing behaviour of R&D investment in the emerging markets: the role of alliance and financial system

2017

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“…However, R&D intensity was found to have a negative relationship with the cash flow ratio. These results contrasted with those derived by Himmelberg and Petersen (1994) [32], Hottenrott and Peters (2012) [84], and Sasidharan, Lukose, and Komera (2015) [85]. However, our results reflected those of Podolski (2016) [86] and Seifert and Gonenc (2012) [18], who found a similar negative relationship between cash flow and R&D investment.…”

Section: Discussioncontrasting

confidence: 99%

Corporate Governance Structure, Financial Capability, and the R&D Intensity in Chinese Sports Sector: Evidence from Listed Sports Companies

2019

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Innovations are the foundation of an enterprise's sustainable development, which is particularly important for sports firms in an evolving Chinese sport industrial environment. Analyzing publicly-listed sports firms on The New Third Board (NTB) in China, this study examined the influence of corporate financial capability and corporate governance structure on firms' R&D intensity through a series of multiple regression models. Findings revealed that corporate financial capability is an important determinant of R&D intensity, and corporate governance structure has a small but meaningful effect on R&D intensity. Specifically, for Chinese sports firms, several financial capability indicators, such as return on equity, accounts receivable turnover, assets turnover, and profit growth rate, have positive relationships with R&D intensity; however, other financial capability indicators, such as leverage and cash flow, have negative relationships with R&D intensity. Limited evidence was found to support the notion that corporate governance significantly influences R&D intensity, although sports firms with good governance mechanisms are more likely to increase the positive effects of financial capabilities on R&D intensity while decreasing the negative effects. Discussions were centered on planning and executing R&D activities in sports companies.

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“…In addition, corporate investment decisions are highly dependent on investment opportunities, and previous studies generally measure investment opportunities as Tobin's Q. However, since it is difficult to measure Tobin's Q in the limit of samples for the study, the past three year average sales growth rate as the proxy variable of the investment opportunity of the company [36]. In addition, since the capital structure of a firm affects the R&D investment in the previous study [37], the debt ratio of a firm is added as a control variable.…”

Section: Variablesmentioning

confidence: 99%

Firm Characteristics, Uncertainty and Research and Development (R&D) Investment: The Role of Size and Innovation Capacity

Jung

Kwak²

2018

Sustainability

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This paper examines the investment behavior of research and development (R&D) under uncertainty. We assume that there is a heterogeneous effect of uncertainty on R&D investment depending on characteristics of a firm. According to the results, the size and the innovation capacity of a firm are found to positively moderate the negative relationship between uncertainty and R&D investment. When the entire sample is divided into large and small-and-medium enterprises and high innovation capacity and low innovation capacity, it is found that the innovation capacity of a firm is a more crucial factor in positively moderating the negative relationship between R&D investment and uncertainty than the size of a firm. These findings provide policy implications, particularly for small-and-medium enterprises (SMEs), to promote R&D activities.

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Financing constraints and investments in R&D: Evidence from Indian manufacturing firms

Cited by 111 publications

References 66 publications

Financing behaviour of R&D investment in the emerging markets: the role of alliance and financial system

Financing behaviour of R&D investment in the emerging markets: the role of alliance and financial system

Corporate Governance Structure, Financial Capability, and the R&D Intensity in Chinese Sports Sector: Evidence from Listed Sports Companies

Firm Characteristics, Uncertainty and Research and Development (R&D) Investment: The Role of Size and Innovation Capacity

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