R&D Investments and Credit Lines_JCF.pdf (1.05 MB)
R&D investments and credit lines
journal contributionposted on 2017-09-07, 12:10 authored by Yilmaz Guney, Ahmet Karpuz, Neslihan Ozkan
Using data for 939 publicly listed firms from 17 European countries over the period from 2004 to 2013, we investigate the effect of used credit lines on R & D investments, controlling for other determinants of R & D investments, i.e., cash flows, cash holdings, sales growth, equity financing, and Tobin's Q. Our estimation results, based on the system-GMM method, show that used credit lines have a positive and significant impact on R & D investments. In addition, we find that this impact is more pronounced for small and young firms than for large and mature firms. These results show that firms use credit lines as part of their liquidity management tools for supporting their R & D investments. Finally, we provide evidence that European firms in bank-based countries increased their use of credit lines for financing their R & D investments during the financial crisis of 2007–2009, while the link between R & D investments and used credit lines became weaker during the European sovereign debt crisis of 2010–2013.
- Business and Economics
Published inJournal of Corporate Finance
Pages261 - 283
CitationGUNEY, Y., KARPUZ, A. and OZKAN, N., 2017. R&D investments and credit lines. Journal of Corporate Finance, 46, pp. 261-283.
- AM (Accepted Manuscript)
Publisher statementThis work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/
NotesThis paper was accepted for publication in the journal Journal of Corporate Finance and the definitive published version is available at https://doi.org/10.1016/j.jcorpfin.2017.07.011