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The sensitivity of R&D investments to cash flows: Comparing young and old EU and US leading innovators

Author

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  • Michele Cincera
  • Julien Ravet
  • Reinhilde Veugelers

Abstract

Using firm level information on the world leading R&D investors and employing a system GMM estimation, this paper investigates how sensitive R&D investments are to cash flow movements, which would be suggestive of financial constraints. The analysis confirms that over the last decade the R&D investments of younger aged leading innovators appear to be more sensitive to cash flows compared to their older counterparts and that this holds particularly for EU younger aged leading innovators compared to their US counterparts, particularly in medium and high tech sectors.

Suggested Citation

  • Michele Cincera & Julien Ravet & Reinhilde Veugelers, 2015. "The sensitivity of R&D investments to cash flows: Comparing young and old EU and US leading innovators," Working Papers of Department of Management, Strategy and Innovation, Leuven 497091, KU Leuven, Faculty of Economics and Business (FEB), Department of Management, Strategy and Innovation, Leuven.
    • Handle: RePEc:ete:msiper:497091
    Note: paper number MSI_1508
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    File URL: https://lirias.kuleuven.be/retrieve/384ae607-1e07-44d9-9c1e-021a29b9bf2f
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