How does the financial environment affect the stock market valuation of R&D spending?

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• 作者：G. Geoffrey Booth ; Juha Junttila ; Juha-Pekka Kallunki ; Markku Rahiala and Petri Sahlströ ; m
• 关键词：R& ; D ; Stock market ; Valuation ; Financial system
• 刊名：Journal of Financial Intermediation
• 出版年：2006
• 出版时间：April 2006
• 年：2006
• 卷：15
• 期：2
• 页码：197-214
• 全文大小：180 K

文摘

This paper investigates the role of the financial environment in the stock market valuation of research and development (R&D) spending by firms. We examine the importance of equity financing relative to bank financing and the importance of both relative to the size of the economy on the stock market valuation of R&D expenditures. Empirical analysis of the Compustat Global Vantage firm-level data indicates that, the more market-based a financial system is, the more R&D expenditures are valued by the stock market. The degree of financial development does not appear to be important. Our results remain materially unchanged after controlling for numerous firm and country differences.