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Working capital and R&D smoothing: evidence from the Tel Aviv stock exchange

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  • Ahmad Alkhataybeh

Abstract

This paper proposes new tests for financing constraints on R&D investment by directly examining the role played by working capital in smoothing the R&D expenditures of firms listed on the Tel Aviv stock exchange. It emphasizes the importance of working capital, not only for use but also as a source of funds. The findings offer new evidence for why levels of liquidity are important for R&D-intensive firms. Working capital alleviates the effects of transient finance shocks on the level of R&D, thereby averting the high adjustment costs that accompany changes in R&D.

Suggested Citation

  • Ahmad Alkhataybeh, 2021. "Working capital and R&D smoothing: evidence from the Tel Aviv stock exchange," Journal of Applied Economics, Taylor & Francis Journals, vol. 24(1), pages 91-102, January.
  • Handle: RePEc:taf:recsxx:v:24:y:2021:i:1:p:91-102
    DOI: 10.1080/15140326.2021.1877599
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    Cited by:

    1. Ahmad Alkhataybeh & Safaa Adnan AlSmadi & Mohammad Ziad Shakhatreh & Mohammad A. Khataybeh, 2022. "Government Ownership and Corporate Cash Holdings: Empirical Evidence from the Amman Stock Exchange," Sustainability, MDPI, vol. 14(18), pages 1-14, September.
    2. Xiaoxu Zhang & Yu Song & Hongyu Liu, 2023. "Too Much of a Good Thing? The Impact of Serial M&A on Innovation Performance," Sustainability, MDPI, vol. 15(12), pages 1-23, June.

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