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R&D Investment Smoothing and Corporate Diversification

  • Takashi Hatakeda

    (Graduate School of Business Administration, Kobe University)

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    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 don' t 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 doesn' t 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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    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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    Web page: http://www.b.kobe-u.ac.jp/repec/kbb/

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