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R&D Investment Smoothing and Corporate Diversification

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  • Takashi Hatakeda

    (Graduate School of Business Administration, Kobe University)

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    Abstract

    We estimate dynamic R&D investment models in publicly traded Japanese manufacturing firms over 2001-2009. Splitting into two subsamples by the degree of corporate diversification, we provide evidence that less-diversified firms have an increased tendency to smooth R&D@but more-diversified firms donft do it. To clarify the causes behind corporate diversification, we also turn our eyes on the effect of financial liquidity or share ownership structure, showing that financially unconstrained firms tend to smooth R&D investment. We, furthermore, provide evidence that corporate diversification doesnft improve financial liquidity in financially constrained firms, but deteriorates financial liquidity in some financially unconstrained firms.

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    File URL: http://www.b.kobe-u.ac.jp/paper/2012_42.pdf
    File Function: First version, 2012
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    Bibliographic Info

    Paper provided by Kobe University, Graduate School of Business Administration in its series Discussion Papers with number 2012-42.

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    Length: 79 pages
    Date of creation: Nov 2012
    Date of revision:
    Handle: RePEc:kbb:dpaper:2012-42

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    Postal: 2-1, Rokkodai, Nada-ku, Kobe City 657-8501
    Phone: 078-881-1212
    Fax: 078-803-6977
    Web page: http://www.b.kobe-u.ac.jp/repec/kbb/
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    Related research

    Keywords: corporate diversification; R&D; investment smoothing; financial liquidity; share ownership structure;

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