Investment, R&D and liquidity constraints

Patrick Van Cayseele

No 33, Working Paper Research from National Bank of Belgium

Abstract: In this contribution, we present a novel instrument to control for investment opportunities in studying the investment-cash-flow sensitivity. More in particular we introduce the book value of R&D. We argue this instrument has advantages over other theories of investment, especially when focussing on the corporate governance aspects of the investment-cash-flow sensitivity. On the other hand, it implies the investment-cash-flow sensitivity can only be studied in high-tech environments. These have corporate governance problems of their own. To investigate their effect, a signalling model is extended for R&D induced investment opportunities, and estimated on a panel of Belgian data.

Pages: 36 pages
Date: 2002-05
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:nbb:reswpp:200205-14

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