How does leverage affect R&D intensity and how does R&D intensity impact on firm value in South Korea?

Byung Min, Russell Smyth

Research output: Contribution to journalArticleResearchpeer-review

4 Citations (Scopus)

Abstract

We examine how leverage affects corporate research and development (R&D) intensity, as well as examine the impact of R&D on firm value in South Korea, a country in which corporate-funded R&D intensity is one of the highest in the world. Among our main results, we find that growth opportunities have a positive effect on R&D intensity, while leverage has a negative effect on R&D intensity. When leverage is at an extremely high level, the relationship between growth opportunities and R&D intensity turns from positive to negative. Using instrumental variables, we find that R&D generates an increase in firm value.
Original languageEnglish
Pages (from-to)5667-5675
Number of pages9
JournalApplied Economics
Volume48
Issue number58
DOIs
Publication statusPublished - 2016

Keywords

  • Firm value
  • leverage
  • R&D
  • South Korea

Cite this

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abstract = "We examine how leverage affects corporate research and development (R&D) intensity, as well as examine the impact of R&D on firm value in South Korea, a country in which corporate-funded R&D intensity is one of the highest in the world. Among our main results, we find that growth opportunities have a positive effect on R&D intensity, while leverage has a negative effect on R&D intensity. When leverage is at an extremely high level, the relationship between growth opportunities and R&D intensity turns from positive to negative. Using instrumental variables, we find that R&D generates an increase in firm value.",
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How does leverage affect R&D intensity and how does R&D intensity impact on firm value in South Korea? / Min, Byung; Smyth, Russell.

In: Applied Economics, Vol. 48, No. 58, 2016, p. 5667-5675.

Research output: Contribution to journalArticleResearchpeer-review

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AU - Min, Byung

AU - Smyth, Russell

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AB - We examine how leverage affects corporate research and development (R&D) intensity, as well as examine the impact of R&D on firm value in South Korea, a country in which corporate-funded R&D intensity is one of the highest in the world. Among our main results, we find that growth opportunities have a positive effect on R&D intensity, while leverage has a negative effect on R&D intensity. When leverage is at an extremely high level, the relationship between growth opportunities and R&D intensity turns from positive to negative. Using instrumental variables, we find that R&D generates an increase in firm value.

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