- Title
- To what extent do earnings affect the R&D decision of Chinese manufacturing firms?
- Creator
- Wang, Yun; Zhai, Yu; Sun, Xiaohua; Colombage, Sisira
- Date
- 2020
- Type
- Text; Journal article
- Identifier
- http://researchonline.federation.edu.au/vital/access/HandleResolver/1959.17/174311
- Identifier
- vital:14883
- Identifier
-
https://doi.org/10.1080/09537325.2019.1661373
- Identifier
- ISBN:0953-7325 (ISSN)
- Abstract
- As R&D activities are involved in inherent uncertainty of large investment, high risk and long return periods, earnings, as the main source of internal financing, have been a significant factor of R&D decision in the firms. In contrast to the previous research, this study investigates the impacts of firm’s earnings on R&D decision, in which earnings are measured by the indicators of earnings level, earnings quality and earnings persistence, while separating firm R&D activity into two stages of (i) the decision to undertake R&D activity and (ii) the amount to be invested on innovation activities. We document that earnings level can increase the probability of undertaking R&D activity, but has no effect on R&D investment intensity. Earnings quality and earnings persistence have a promotional effect on both stages of R&D decision. The empirical evidence of the subsamples shows that the impacts of earnings are heterogeneous across different ownership and technology-intensity firms. © 2019, © 2019 Informa UK Limited, trading as Taylor & Francis Group.
- Publisher
- Routledge
- Relation
- Technology Analysis and Strategic Management Vol. 32, no. 3 (2020), p. 349-362
- Rights
- Metadata is freely available under a CCO license
- Rights
- Copyright @ 2019 Informa UK Limited, trading as Taylor & Francis Group
- Subject
- 1402 Applied Economics; 1503 Business and ManagementEarnings; Earnings level; Earnings persistence; Earnings quality; R&D decision
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