The Sensitivity of R&D Investments to Cash Flows: Comparing Young and Old EU and US Leading Innovators
24 Pages Posted: 9 Jun 2015
Date Written: April 20, 2015
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: Suggested Citation