R&amp;D Intensity and Corporate Financial Policy: Some International Evidence

Bah, Rahim; Dumontier, Pascal

doi:10.1111/1468-5957.00389

Cited by 121 publications

(84 citation statements)

References 23 publications

(27 reference statements)

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“…Bah and Dumontier (2001) find lower leverage for R&D intensive companies in the USA, UK, Japan and countries in continental Europe. Aghion et al (2004) find higher leverage for listed UK companies with R&D activity and that leverage decreases with increasing R&D intensity.…”

Section: Related Literaturementioning

confidence: 89%

The importance of equity finance for R&D activity

2008

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Section: Related Literaturementioning

confidence: 89%

The importance of equity finance for R&D activity

2008

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“…These two elements require high investment and should be financed internally since firms avoid to reveal such information because of its strategic nature that could be used by the competitors (Bah and Dumontier, 2001). Firms favor then internal financing and, therefore, 12 Environment score (ENV_NET) loads positive and significant only with the second measure of dividend payout (cash dividends to total assets in Model 12).…”

Section: Individual Components Of Csr and Dividend Policymentioning

confidence: 99%

Why Do Socially Responsible Firms Pay More Dividends?

Benlemlih¹

2014

SSRN Journal

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Using a sample of 22,389 US firm-year observations over the period from 1991 to 2012, we find that high CSR firms pay more dividends than low CSR firms. This is consistent with our expectation that socially responsible firms may use the dividend policy to manage the agency problems related to overinvestment in CSR. The analysis of individual components of CSR provides strong support for this main finding: five of the six dimensions used in the analysis are also associated with high dividend payout, namely, corporate governance, community, diversity, employee relations, environment. Furthermore, by analyzing the stability of dividend payout, we find that socially irresponsible firms adjust dividends quicker than do socially responsible firms: dividend payout is more stable in high CSR firms than in low CSR firms. Additional results show that firms involved in two controversial activities: military and alcohol are associated with low dividend payout which is likely due to the high cost of external funding for these firms as highlighted by Goss and Roberts (2011). Our findings are robust to alternative assumptions and model specifications, alternative measures of dividend payout, additional control variables, and several approaches to address endogeneity and selection bias issues.Keywords: Corporate social responsibility, dividend policy, agency theory JEL classification: G32, M14 *PhD Candidate in Finance -Grenoble University -CERAG UMR CNRS 5820 -BP 47, 38040 Grenoble Cedex 9, France -Mohammed.benlemlih@upmf-grenoble.fr. 2 Why do socially responsible firms pay more dividends?Abstract Using a sample of 22,389 US firm-year observations over the period from 1991 to 2012, we find that high CSR firms pay more dividends than low CSR firms. This is consistent with our expectation that socially responsible firms may use the dividend policy to manage the agency problems related to overinvestment in CSR. The analysis of individual components of CSR provides strong support for this main finding: five of the six dimensions used in the analysis are also associated with high dividend payout, namely, corporate governance, community, diversity, employee relations, environment. Furthermore, by analyzing the stability of dividend payout, we find that socially irresponsible firms adjust dividends quicker than do socially responsible firms: dividend payout is more stable in high CSR firms than in low CSR firms. Additional results show that firms involved in two controversial activities: military and alcohol are associated with low dividend payout which is likely due to the high cost of external funding for these firms as highlighted by Goss and Roberts (2011). Our findings are robust to alternative assumptions and model specifications, alternative measures of dividend payout, additional control variables, and several approaches to address endogeneity and selection bias issues.

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“…Brown and Petersen (2009) concludes that R&D activities face financing constraints, especially long-term debt financing constraints due to its features of the high-risk, high-information asymmetry, high growth and less available mortgage tangible assets. Bah and Dumontier (2001) point out that short-term loans can reduce asset substitution motivation and control the problem of under-investment, because Short-term loans to enable enterprises are often faced with the pressure of debt service, and the short-term borrowing requirements companies often re-signed debt covenants. And when the enterprises are facing bankruptcy, the short-term debt financing is more conducive to the creditor to recover the funds.…”

Section: Debt Maturity Structure and Randd Investmentmentioning

confidence: 99%

Political Connections, Debt Financing and Firms’ R&D Investment – Evidence from Listed Companies in China

Zhang

Wang

Yan

2013

Proceedings of 20th International Conference on Industrial Engineering and Engineering Management

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On the basis of listed company's date from 2009 to 2011, this paper empirically studies the influence political connections and debt financing have on firm's research and development investment. It is suggested that there is an inverse correlation between the ratio of debt financing (bank loans) and the research and development intensity. By occupying a large amount of short-term debts, firms fail to reverse the debt financing constraints, and the key still lies in the deficiency of support from long-term debt. Although political connections bring certain longterm debt resources to firms, they fail to generate significant "resource effect" and drive firms' research and development investment as expected. On the contrary, political connections also bring "extrusion effect", to which firms should pay enough attention and introspect themselves.

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R&D Intensity and Corporate Financial Policy: Some International Evidence

Cited by 121 publications

References 23 publications

The importance of equity finance for R&D activity

The importance of equity finance for R&D activity

Why Do Socially Responsible Firms Pay More Dividends?

Political Connections, Debt Financing and Firms’ R&D Investment – Evidence from Listed Companies in China

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