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What matters more in R&D and Capital Expenditures Financing by Japanese Firms:Multinationality or Bank Affiliation?

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Author Info

  • Mehdi Nekhili

    ()
    (Université de Reims Champagne Ardennes)

  • Dhikra Chebbi Nekhili

    (Université de Bourgogne)

  • Nicolas Vaillant

    (Université Catholique de Lille)

Abstract

In this paper, we investigate the relation between cash flow, debt, investment and performance according to whether the firm is multinational (versus domestic), keiretsu (versus independent) or both multinational and keiretsu. Using a Japanese sample of 3024 firm-year observations in the period 2000 to 2002, the results shed lights on the association between financing, investment and performance in the Japanese context. First, they suggest that cash flow is the principal source of financing of both tangible and intangible investment. Second, we find that firms which are both multinational and keiretsu are the most constrained ones regarding capital investments. Finally, for both multinational and domestic firms, bank affiliation alters the relationship between R&D and performance as well as between capital investment and performance.

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Bibliographic Info

Paper provided by Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations in its series Working Papers CREGO with number 1090103.

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Length: 22 pages
Date of creation: Jan 2009
Date of revision:
Handle: RePEc:dij:wpfarg:1090103

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Postal: Angèle Renaud, CREGO, 2 Bd Gabriel, BP 26611, 21066 Dijon Cedex, France
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Related research

Keywords: R&D; capital expenditures; bank affiliation; keiretsu; multinational.;

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References

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  1. Houston, Joel F & James, Christopher M, 2001. "Do Relationships Have Limits? Banking Relationships, Financial Constraints, and Investment," The Journal of Business, University of Chicago Press, vol. 74(3), pages 347-74, July.
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  11. Bae, Sung C. & Noh, Seungwook, 2001. "Multinational corporations versus domestic corporations: a comparative study of R&D investment activities," Journal of Multinational Financial Management, Elsevier, vol. 11(1), pages 89-104, February.
  12. Steven Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1987. "Financing Constraints and Corporate Investment," NBER Working Papers 2387, National Bureau of Economic Research, Inc.
  13. Dewenter, Kathryn & Novaes, Walter & Pettway, Richard H, 2001. "Visibility versus Complexity in Business Groups: Evidence from Japanese Keiretsu," The Journal of Business, University of Chicago Press, vol. 74(1), pages 79-100, January.
  14. Holmstrom, Bengt, 1989. "Agency costs and innovation," Journal of Economic Behavior & Organization, Elsevier, vol. 12(3), pages 305-327, December.
  15. Dittmar, Amy & Mahrt-Smith, Jan & Servaes, Henri, 2003. "International Corporate Governance and Corporate Cash Holdings," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 38(01), pages 111-133, March.
  16. Shin-ichi Fukuda & Ji Cong & Megumi Okui & Kenichi Okuda, 2000. "Long Term Loans and Investment in Japan: An Empirical Analysis Based on the Panel Data of Japanese Firms," CIRJE F-Series CIRJE-F-80, CIRJE, Faculty of Economics, University of Tokyo.
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