Does Cash Flow Cause Investment and R&D: An Exploration Using Panel Data for French, Japanese, and United States Scientific Firms

Bronwyn H Hall, Jacques MAIRESSE (), Lee Branstetter and Bruno Crepon
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Lee Branstetter: UC Davis & NBER
Bruno Crepon: INSEE-CREST

Finance from EconWPA

Abstract: The role of financial institutions and corporate governance in the conduct and performance of industrial firms, especially in the area of technological innovation and international competition has been hotly debated in the recent past. The results presented here are a contribution to the empirical evidence on the behavior of individual firms that exist in somewhat different institutional environments. Using a Panel Data version of the Vector Auto Regressive (VAR) methodology, we test for causal relationship among sales and cash flow on the one hand and investment and R&D on the other, using three large panels of firms in the scientific (high technology) sectors in the United States, France, and Japan. Our findings are that both investment and R&D are more highly sensitive to cash flow and sales in the United States than in France and Japan. Corresponding, both investment and R&D predict both cash flow and sales positively in the United States, while the impact is somewhat more mixed in the other countries.

Keywords: investment; R&D; panel data; international comparisons; cash flow; firm-level (search for similar items in EconPapers)
JEL-codes: G32 O32 C33 (search for similar items in EconPapers)
Date: 1999-02-12
Note: Type of Document - Acrobat .pdf; prepared on Maybe TeX; to print on HP/; pages: 49; figures: included
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http://129.3.20.41/eps/fin/papers/9902/9902005.pdf (application/pdf)

Related works:
Working Paper: Does Cash Flow Cause Investment and R& D: An Exploration Using Panel Data for French, Japanese, and United States Scientific Firms (1998)
Working Paper: Does Cash Flow cause Investment and R&D: An Exploration Using Panel Data for French, Japanese, and United States Scientific Firms (1998)
Working Paper: Does cash flow cause investment and R&D: an exploration using panel data for French, Japanes and United States scientific firms (1998)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpfi:9902005

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