TY - JOUR
T1 - The Effects of Future Capital Investment and R and D Expenditures on Firms' Liquidity
AU - Baum, C.F.
AU - Caglayan, M.
AU - Talavera, O.
PY - 2013
Y1 - 2013
N2 - The paper explores factors that lead to accumulation or decumulation of firms' cash reserves. In particular, the paper empirically examines whether additional future fixed capital and R&D investment expenditures induce firms to change their liquidity ratio while considering the role of market imperfections. Implementing a dynamic framework on a panel of US, UK, and German firms, it is found that firms in all three countries make larger adjustments to cash holdings when they plan additional future R&D rather than fixed capital investment expenditures. This behavior is particularly prevalent among financially constrained firms.
AB - The paper explores factors that lead to accumulation or decumulation of firms' cash reserves. In particular, the paper empirically examines whether additional future fixed capital and R&D investment expenditures induce firms to change their liquidity ratio while considering the role of market imperfections. Implementing a dynamic framework on a panel of US, UK, and German firms, it is found that firms in all three countries make larger adjustments to cash holdings when they plan additional future R&D rather than fixed capital investment expenditures. This behavior is particularly prevalent among financially constrained firms.
UR - http://www.scopus.com/inward/record.url?eid=2-s2.0-84880407775&partnerID=MN8TOARS
U2 - 10.1111/roie.12048
DO - 10.1111/roie.12048
M3 - Article
SN - 0965-7576
VL - 21
SP - 459
EP - 474
JO - Review of International Economics
JF - Review of International Economics
IS - 3
ER -