Debt, Ownership Structure, and R&D Investment: Evidence from Japan
AbstractFinancial factors and ownership structure are both part of the determinants of corporate R&D investment. Considering listed firms in the R&D intensive industries during the 2000s, this paper examines whether financial factors and ownership structure explain R&D investment in Japan. Following the methodology of Brown et al. (2009), which extends the dynamic investment model of Bond and Maghir (1994) to R&D investment, we find that only small, young firms mainly listed on new emerging markets face financial constraints. We also find that large firms finance R&D investment partly from debt. For firms with relatively limited assets, however, higher leverage leads to lower R&D investment. Finally, we find no evidence that large shareholdings by foreign investors enforce myopic behavior on firms in R&D intensive industries.
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Bibliographic InfoPaper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 11013.
Length: 32 pages
Date of creation: Mar 2011
Date of revision:
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-19 (All new papers)
- NEP-BEC-2011-03-19 (Business Economics)
- NEP-CFN-2011-03-19 (Corporate Finance)
- NEP-INO-2011-03-19 (Innovation)
- NEP-SBM-2011-03-19 (Small Business Management)
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