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Investment, R&D and liquidity constraints

Author

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  • Pr. D. Patrick Van Cayseele

    (Katholiek Universiteit Leuven)

Abstract
In this contribution, we present a novel instrument to control for investment opportunities in studying the investment-cash-flow sensitivity. More in particular we introduce the book value of R&D. We argue this instrument has advantages over other theories of investment, especially when focussing on the corporate governance aspects of the investment-cash-flow sensitivity. On the other hand, it implies the investment-cash-flow sensitivity can only be studied in high-tech environments. These have corporate governance problems of their own. To investigate their effect, a signalling model is extended for R&D induced investment opportunities, and estimated on a panel of Belgian data.

Suggested Citation

  • Pr. D. Patrick Van Cayseele, 2002. "Investment, R&D and liquidity constraints," Working Paper Research 33, National Bank of Belgium.
    • Handle: RePEc:nbb:reswpp:200205-14
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    File URL: https://www.nbb.be/doc/ts/publications/wp/wp33en.pdf
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    References listed on IDEAS

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    Cited by:

    1. Axel Gautier & Malika Hamadi, 2005. "Internal Capital Market Efficiency of Belgian Holding Companies," Finance, Presses universitaires de Grenoble, vol. 26(2), pages 11-34.
    2. Marcel Gérard & Frédéric Verscueren, 2002. "Finance, uncertainty and investment: assessing the gains and losses of a generalized non linear structural approach using Belgian panel data," Working Paper Research 26, National Bank of Belgium.
    3. Joanna Tyrowicz, 2007. "Blame No One ?Investment Decisions of the Polish Stock-Listed Companies," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 50(4), pages 391-410.
    4. Michele Cincera, 2003. "Financing constraints, fixed capital and R&D investment decisions of Belgian firms," Chapters, in: Paul Butzen & Catherine Fuss (ed.), Firms’ Investment and Finance Decisions, chapter 6, pages 129-152, Edward Elgar Publishing.
    5. Katleen Baeyens & Sophie Manigart & Ilse Verschueren, 2003. "Financing and investment interdependencies in unquoted Belgian companies: the role of venture capital," Chapters, in: Paul Butzen & Catherine Fuss (ed.), Firms’ Investment and Finance Decisions, chapter 5, pages 105-128, Edward Elgar Publishing.
    6. Ronald W. Anderson, 2002. "Capital structure, firm liquidity and growth," Working Paper Research 27, National Bank of Belgium.
    7. Geert Langenus, 2006. "Fiscal sustainability indicators and policy design in the face of ageing," Working Paper Research 102, National Bank of Belgium.

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