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The Moderating Role of Institutional Quality, Leverage and Size in the Relationship between R&D Investments and Firm Value

This study examines the relationship between R&D intensity (R&D/sales) and firm value. Additionally, both the moderating effect of endogenous firm characteristics (i.e. firm size, leverage and the interaction between size and leverage) and institutional quality are considered. By employing a sample of 1,833 firms throughout 49 countries, this study finds evidence supporting a positive association between R&D and firm value in its cross-national sample. Moreover, the results support the positive moderating effect of leverage on the relationship between R&D and firm value, in favour of the disciplining role of debt. Furthermore, a negative moderating effect of firm size is found, suggesting that smaller firms possess a superior ability to appropriate value from their R&D investments. Lastly, the size-leverage interaction reveals that small firms with high leverage reap the greatest firm value from their R&D investments.

Identiferoai:union.ndltd.org:UPSALLA1/oai:DiVA.org:uu-377180
Date January 2019
CreatorsShiva, Suman
PublisherUppsala universitet, Företagsekonomiska institutionen
Source SetsDiVA Archive at Upsalla University
LanguageEnglish
Detected LanguageEnglish
TypeStudent thesis, info:eu-repo/semantics/bachelorThesis, text
Formatapplication/pdf
Rightsinfo:eu-repo/semantics/openAccess

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