IDEAS home Printed from https://ideas.repec.org/a/wsi/jfmmix/v11y2023i01ns2282717x23500032.html
   My bibliography  Save this article

Changes In Research And Development During Financial Distress: Empirical Evidence From The 2007–2008 Financial Crisis

Author

Listed:
  • JITKA HILLIARD

    (Harbert College of Business, Auburn University, Alabama, USA)

  • HAORAN ZHANG

    (��O’Malley School of Business, Manhattan College, New York, USA)

Abstract

We examine how changes in research and development expenditures (R&Ds) at the beginning of the 2008 financial crisis affected firms’ market performance immediately after the crisis. Our sample contains 2470 firms listed on NYSE and NASDAQ. We find that firms that increased their investment in R&Ds had higher risk-adjusted returns in 2009. The highest risk-adjusted returns were among firms that decreased dividends but increased their R&Ds and are associated with the firms’ managerial efforts before and during the crisis. These findings underscore the importance of investment in innovations even during severe cash constraints and document that firms benefit from preserving cash by cutting other than R&D expenses.

Suggested Citation

  • Jitka Hilliard & Haoran Zhang, 2023. "Changes In Research And Development During Financial Distress: Empirical Evidence From The 2007–2008 Financial Crisis," Journal of Financial Management, Markets and Institutions (JFMMI), World Scientific Publishing Co. Pte. Ltd., vol. 11(01), pages 1-15, June.
    • Handle: RePEc:wsi:jfmmix:v:11:y:2023:i:01:n:s2282717x23500032
    DOI: 10.1142/S2282717X23500032
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S2282717X23500032
    Download Restriction: Open Access
    File URL: https://libkey.io/10.1142/S2282717X23500032?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    R&D; financial crisis; corporate performance;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

    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:wsi:jfmmix:v:11:y:2023:i:01:n:s2282717x23500032. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: https://www.worldscientific.com/worldscinet/jfmmi .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.