Key Determinants of R&D Expenditures in the Us Telecommunications Equipment Industry

32 Pages Posted: 16 Mar 2005

See all articles by Fotios Harmantzis

Fotios Harmantzis

FX Concepts

Venkata Praveen Tanguturi

Institute for Infocomm Research - Agency for Science, Technology, and Research

Date Written: November 28, 2005

Abstract

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

Harmantzis, Fotios and Tanguturi, Venkata Praveen, Key Determinants of R&D Expenditures in the Us Telecommunications Equipment Industry (November 28, 2005). Available at SSRN: https://ssrn.com/abstract=686968 or http://dx.doi.org/10.2139/ssrn.686968

Fotios Harmantzis (Contact Author)

FX Concepts

New York, NY 10122

Venkata Praveen Tanguturi

Institute for Infocomm Research - Agency for Science, Technology, and Research ( email )

21 Heng Mui Keng Terrace
119613
Singapore

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