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The Relation between Cash Holdings and R&D Expenditures According to Ownership Structure

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  • Hyuna Kim
  • Sun-Young Park

Abstract

In this paper, we examine how the cash holdings have an impact on R&D expenditures and whether the ownership mechanisms moderate the R&D expenditures- the resource of internal funds relationship. The result showed that cash holdings have a positively relationship with R&D expenditures. Specially, we found that institutional ownership had a positive moderating effect of the R&D expenditures-the resource of internal funds relationship. In additional analysis, the large business group and the share of managers doesn’t moderate the relationship between cash holdings and R&D expenditures. These results provide that institutional investor in Korea tend to be long-term oriented, “active” and “sophisticated” investor. They are less likely to evaluate corporate executives on the basis of short-term earnings alone and are more likely to support value-creating. Copyright Eurasia Business and Economics Society 2012

Suggested Citation

  • Hyuna Kim & Sun-Young Park, 2012. "The Relation between Cash Holdings and R&D Expenditures According to Ownership Structure," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 2(2), pages 25-42, December.
    • Handle: RePEc:spr:eurasi:v:2:y:2012:i:2:p:25-42
    DOI: 10.14208/BF03353811
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    7. Lai, Yung-Lung & Lin, Feng-Jyh & Lin, Yi-Hsin, 2015. "Factors affecting firm's R&D investment decisions," Journal of Business Research, Elsevier, vol. 68(4), pages 840-844.

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