IDEAS home Printed from https://ideas.repec.org/a/bla/finrev/v32y1997i1p21-48.html
   My bibliography  Save this article

A Test of the Debt-Monitoring Hypothesis: The Case of Corporate R&D Expenditures

Author

Listed:
  • Zantout, Zaher Z

Abstract

Studies that test for shareholder wealth effects of announcements of plans to increase R&D expenditures find an average positive effect, but also a significant cross-sectional variation. This study determines whether the effect can be predicted when the announcing firm's capital structure is considered. Results suggest a positive relation between the debt ratio and the R&D induced abnormal stock returns. These results are robust using different industry-adjusted and unadjusted measures of capital structure and while controlling for several potentially influential variables. In addition, the gains to shareholders do not seem to be wealth transfers from bondholders. This evidence provides support to the debt-monitoring hypothesis. Copyright 1997 by MIT Press.

Suggested Citation

  • Zantout, Zaher Z, 1997. "A Test of the Debt-Monitoring Hypothesis: The Case of Corporate R&D Expenditures," The Financial Review, Eastern Finance Association, vol. 32(1), pages 21-48, February.
  • Handle: RePEc:bla:finrev:v:32:y:1997:i:1:p:21-48
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Berentsen, Aleksander & Rojas Breu, Mariana & Shi, Shouyong, 2012. "Liquidity, innovation and growth," Journal of Monetary Economics, Elsevier, vol. 59(8), pages 721-737.
    2. Bronwyn Hall, 2004. "The financing of research and development," Chapters,in: Financial Systems, Corporate Investment in Innovation, and Venture Capital, chapter 2 Edward Elgar Publishing.
    3. Nurullah Gur & Veysel Avşar, 2016. "Financial system, R&D intensity and comparative advantage," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(2), pages 213-239, March.
    4. Sinclair Davidson & Robert Brooks, 2004. "R&D, Agency Costs and Capital Structure: International Evidence," Econometric Society 2004 Australasian Meetings 59, Econometric Society.
    5. Hall, Bronwyn H. & Lerner, Josh, 2010. "The Financing of R&D and Innovation," Handbook of the Economics of Innovation, Elsevier.
    6. Mihaela Diaconu, 2016. "Determinants of Financing Decisions in Innovative Firms: A Review on Theoretical Backgrounds and Empirical Evidence," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 198-203, February.
    7. Chazi, Abdelaziz & Khallaf, Ashraf & Liu, Yi & Zantout, Zaher, 2014. "Technology transactions, announcement effect, and reversal: Dissecting an anomaly," The Quarterly Review of Economics and Finance, Elsevier, vol. 54(3), pages 371-381.
    8. Tribo Gine, José Antonio & Martínez Ros, Ester, 2002. "R&D investment and financial contracting in spanish manufacturig firms," DEE - Working Papers. Business Economics. WB wb020904, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:finrev:v:32:y:1997:i:1:p:21-48. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley Content Delivery). General contact details of provider: http://edirc.repec.org/data/efaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.