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Traditional and R&D Investments: are They really Different?

In: New Issues in Financial Institutions Management

Author

Listed:
  • Paola Brighi
  • Giuseppe Torluccio

Abstract

The aim of this chapter is to identify the different role of financial funds in traditional and R&D investments in Italian manufacturing firms using information from Capitalia’s latest Survey of Italian Firms. R&D, defined as a creative activity implemented to improve know-how and its utilization in new applications, is quite distinct because of its high rate of information opacity. Coherently with the asymmetric information theory, R&D thus implies that firms will have greater difficulty in finding external financial funding. The higher risk related to R&D projects could entail some form of financial constraint. However, signalling mechanisms such as self-financing could correct such a market imperfection.

Suggested Citation

  • Paola Brighi & Giuseppe Torluccio, 2010. "Traditional and R&D Investments: are They really Different?," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Franco Fiordelisi & Philip Molyneux & Daniele Previati (ed.), New Issues in Financial Institutions Management, chapter 4, pages 59-87, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-0-230-29915-3_5
    DOI: 10.1057/9780230299153_5
    as

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