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Innovation investment: Behaviour of Chinese firms towards financing sources

journal contribution
posted on 15.10.2019, 00:00 by MK Khan, Ahmad KaleemAhmad Kaleem, S Zulfiqar, U Akram
Although the extant literature on corporate finance has largely focused on capital investments, relatively less attention has been paid to identify how research and development (R&D) related investments are financed. This study empirically tests the relationship between the different financing sources used by firms and their intensity of R&D in the rapidly growing economy of China. Furthermore, we posit that the firm's choice to adopt the finance source for R&D will change if the firm is likely to be in financial constraints. This study finds out an empirical evidence that internally generated cash flows, bank debt, and seasonal public offerings (SPOs) stipulate a positive impact on R&D of Chinese firms, whereas the issuance of bond impacts it negatively. The study also confirms that financially constrained firms perceive the impact of financing sources on their R&D differently than non-financially constrained firms do. Results also slightly differ between high-tech and non-high-tech firms. © 2019 World Scientific Publishing Europe Ltd.

History

Volume

23

Issue

7

Start Page

1950070-1

End Page

1950070-29

Number of Pages

29

eISSN

1757-5877

ISSN

1363-9196

Publisher

Imperial College Press, UK

Peer Reviewed

Yes

Open Access

No

External Author Affiliations

COMSATS University Islamabad; Guanghua School of Management, China

Era Eligible

Yes

Journal

International Journal of Innovation Management