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http://dx.doi.org/10.5762/KAIS.2018.19.4.446

Further Examinations on the Financial Aspects of R&D Expenditure For Firms Listed on the KOSPI Stock Market  

Kim, Hanjoon (Division of Business Administration, Hoseo University)
Publication Information
Journal of the Korea Academia-Industrial cooperation Society / v.19, no.4, 2018 , pp. 446-453 More about this Journal
Abstract
The study examines corporate research & development (R&D) expenditure in modern finance. Firms may face one of the essential issues to maintain their optimal levels of R&D expenditures in order to increase corporate profit. Accordingly, financial determinants that may influence R&D spending are statistically tested for firms listed on the KOSPI stock market during the period from 2010 to 2015. Financial determinants which may discriminate between firms in high-growth and low-growth industries are examined on a relative basis. Explanatory variables including one-period lagged R&D expenses (Lag_RD), cross-product term between the Lag_RD and type of industry (as a dummy variable), and advertising expenses (ADVERTISE) significantly influenced corporate R&D intensity. Moreover, high-growth firms in domestic capital markets showed higher Lag_RD, profitability (PROF) and foreign equity ownership (FOS) than their counterparts in low-growth sectors, whereas low-growth firms had higher market-value based leverage (MLEVER) and ADVERTISE. Overall, these results are expected to influence decision-making of firms concerning the optimal level of R&D expenditure, which may in turn enhance shareholder wealth.
Keywords
Binary Dependent Variable Model; Global Financial Turmoil; Korean Domestic Market; KOSPI-listed Firms; Research & Development (R&D) Intensity; Static Panel Data Model;
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