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| Author: | Bloch, C. |
| Title: | R&D investment and internal finance: the cash flow effect |
| Journal: | Economics of innovation and new technology
2005 : APR, VOL. 14:3, p. 213-223 |
| Index terms: | Cash flow Credit markets Investment R&D Denmark |
| Freeterms: | Internal finance |
| Language: | eng |
| Abstract: | The cash flow effect on R&D investments is investigated for companies in Denmark. Evidence is found that internal funds are important in explaining R&D investments, indicating that R&D investment decisions are affected by credit market imperfections. Cash flow sensitivities are larger both for smaller companies and for companies with low debt relative to assets. Furthermore, this effect is also present after controlling for cash flow's potential role as a predictor of future profitability. |
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