Determinants of investment in tangible and intangible fixed assets

Miguel Garcia-Posada, Álvaro Menéndez () and Maristela Mulino ()
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Álvaro Menéndez: Banco de España
Maristela Mulino: Banco de España

No 2004, Occasional Papers from Banco de España

Abstract: We investigate which firm characteristics are associated with investment in tangible and intangible fixed assets, paying special attention to the case of R&D, and which funding sources are used for each type of investment. Regarding firm characteristics, we find that younger and more profitable firms tend to invest more in all asset types. In the case of size, larger firms invest more in R&D and intangibles but less in tangible fixed assets. In addition, there is a concave relationship between leverage and investment. Regarding funding sources, we find that cash flow is the most important source of funding for intangibles and R&D, whereas financial debt is the most important funding source for tangible fixed assets. Stock issues are used to fund R&D and, especially, tangible fixed assets. Firms use cash holdings to smooth investment in R&D.

Keywords: investment; tangible fixed assets; R&D; intangibles (search for similar items in EconPapers)
JEL-codes: G31 G32 O32 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2020-02
New Economics Papers: this item is included in nep-acc, nep-cfn and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:bde:opaper:2004

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