Debt maturity and corporate R&D investment – the empirical study of US listed firms


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This study investigates the relationships between debt maturity structure and corporation R&D investment. Using a large sample of US listed firms over the period of 1995 to 2015, it was found that the use of bank debt positively influences R&D investment, whereas the use of public debt exerts a negative impact. However, the Sarbanes-Oxley Act (SOX) mitigates the information asymmetry such that the advantages of private information from banks shrunk. As a result, public debtholders benefit more from the SOX and turn out to be positively influenced by the R&D investment after SOX. Moreover, bank debt impact on R&D spending reduces over the post-SOX. The results also find that the SOX influences the debt maturity on corporate R&D investment only for large corporations, the effects remain unchanged for small businesses.

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    • Figure 1. Relationships among R&D investment, bank debt ratio and public debt ratio over time
    • Table 1. Descriptive statistics of firm characteristics and correlations among the predictors of R&D investment
    • Table 2. Hausman test for endogeneity
    • Table 3. Firm R&D investments and debt maturity structure
    • Table 4. Multivariate difference-in-differences analysis and robustness checks
    • Table 5. Difference-in-differences estimation summary
    • Table 1a. Definition of variables