Please use this identifier to cite or link to this item: https://doi.org/10.1086/499140
Title: Size, leverage, concentration, and R&D investment in generating growth opportunities
Authors: Ho, Y.K. 
Tjahjapranata, M.
Yap, C.M. 
Issue Date: 2006
Source: Ho, Y.K., Tjahjapranata, M., Yap, C.M. (2006). Size, leverage, concentration, and R&D investment in generating growth opportunities. Journal of Business 79 (2) : 851-876. ScholarBank@NUS Repository. https://doi.org/10.1086/499140
Abstract: We show that a firm's ability to reap growth opportunities from R&D investments depends on its size, leverage, and the industry concentration. While the direct effects of these factors are significant, the size-leverage interaction reveals further important insights. Large firms' advantages over small firms disappear as their leverage increases. Specifically, small firms with high leverage reap the greatest growth opportunities. Our results provide explanations for inconsistent findings observed when size and leverage are considered independently in existing studies on value and stock return relevance of R&D investment. We also highlight firm-specific factors that guide investors' valuation of R&D. © 2006 by The University of Chicago. All rights reserved.
Source Title: Journal of Business
URI: http://scholarbank.nus.edu.sg/handle/10635/44533
ISSN: 00219398
DOI: 10.1086/499140
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