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.
Authors registered in the RePEc Author Service: Bruno Crépon, Jacques MAIRESSE, Lee G. Branstetter and Bronwyn H Hall

No 98-260, Economics Working Papers from University of California at Berkeley

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.

Date: 1998-06-01
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Citations: View citations in EconPapers (38)

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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 (1999)
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)
Working Paper: Does Cash Flow cause Investment and R&D: An Exploration Using Panel Data for French, Japanese, and United States Scientific Firms (1998)
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