The Sensitivity of R&D Investments to Cash Flows: Comparing Young and Old EU and US Leading Innovators

24 Pages Posted: 9 Jun 2015

See all articles by Michele Cincera

Michele Cincera

Université Libre de Bruxelles (ULB) - Solvay Brussels School of Economics and Management

Julien Ravet

Université Libre de Bruxelles (ULB) - Solvay Brussels School of Economics and Management

Reinhilde Veugelers

Catholic University of Leuven (KUL) - Department of Applied Economics; Centre for Economic Policy Research (CEPR)

Date Written: April 20, 2015

Abstract

Using firm level information on the world leading R&D investors and employing a system GMM estimation, this paper investigates how sensitive R&D investments are to cash flow movements, which would be suggestive of financial constraints. The analysis confirms that over the last decade the R&D investments of younger aged leading innovators appear to be more sensitive to cash flows compared to their older counterparts and that this holds particularly for EU younger aged leading innovators compared to their US counterparts, particularly in medium and high tech sectors.

Keywords: EU-US R&D gap, younger aged leading innovators, cash-flow sensitivity, R&D investments

JEL Classification: C23, E22, O31, O33

Suggested Citation

Cincera, Michele and Ravet, Julien and Veugelers, Reinhilde, The Sensitivity of R&D Investments to Cash Flows: Comparing Young and Old EU and US Leading Innovators (April 20, 2015). Available at SSRN: https://ssrn.com/abstract=2616221 or http://dx.doi.org/10.2139/ssrn.2616221

Michele Cincera (Contact Author)

Université Libre de Bruxelles (ULB) - Solvay Brussels School of Economics and Management ( email )

42 Av Franklin Roosevelt
1050
Brussels
Belgium
+3226504151 (Phone)
+3226504305 (Fax)

Julien Ravet

Université Libre de Bruxelles (ULB) - Solvay Brussels School of Economics and Management ( email )

19 Av Franklin Roosevelt
1050
Brussels
Belgium

Reinhilde Veugelers

Catholic University of Leuven (KUL) - Department of Applied Economics ( email )

Leuven, B-3000
Belgium
+32 16 32 6908 (Phone)
+32 16 32 6732 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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