Key Determinants of R&D Expenditures in the Us Telecommunications Equipment Industry
32 Pages Posted: 16 Mar 2005
Date Written: November 28, 2005
R&D is of prime importance for firms in the volatile telecom equipment industry in order to remain competitive, develop new products, and innovate. However, R&D spending is criticized a lot during periods of distress and economic recessions. The paper investigates the predictability of research and development expenses in telecommunications equipment (hardware) firms in the United States. Historically, AT&T was controlling the sector being a leader in R&D investments. Our study deals with reported annual financial information of nearly two hundred firms for a period of nearly thirty years. Through our models we find that last year's market value, sales and capital expenditure are all positive correlated and significant in predicting year's end R&D spending. Cash reserves is of less importance. The net income factor is not important in explaining R&D spending in this growth industry.
Keywords: Research & Development (R&D), telecommunications industry
JEL Classification: C12, C31, G30, L63, L96, M40
Suggested Citation: Suggested Citation