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R&D investments and credit lines

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journal contribution
posted on 07.09.2017, 12:10 by Yilmaz Guney, Ahmet KarpuzAhmet 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.

History

School

  • Business and Economics

Department

  • Business

Published in

Journal of Corporate Finance

Volume

46

Pages

261 - 283

Citation

GUNEY, Y., KARPUZ, A. and OZKAN, N., 2017. R&D investments and credit lines. Journal of Corporate Finance, 46, pp. 261-283.

Publisher

© Elsevier

Version

AM (Accepted Manuscript)

Publisher statement

This 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/

Acceptance date

28/07/2017

Publication date

2017-08-01

Notes

This 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

ISSN

0929-1199

Language

en