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The interaction between capital investment and r&d in science-based firms

Lach, Saul and Schankerman, Mark (1987) The interaction between capital investment and r&d in science-based firms. 2377. National Bureau of Economic Research, Cambridge, MA., USA.

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Abstract

This paper analyzes the interaction among R&D, capital investment , and the stock market rate of return for 191 firms in science-based industries for the period 1973-1981. Using a framework based on dynamic factor analysis, we show how several prominent hypotheses about the determination of R&D and investment generate testable parameter restrictions. The data indicate that R&D Granger-causes investment, but that investment does not Granger-cause R&D. We use this finding to examine the validity of those hypotheses, to characterize the movements over time of R&D and investment, and to measure the stock market valuation of these movements.

Item Type: Monograph (Working Paper)
Official URL: http://www.nber.org
Additional Information: © 1987 Saul Lach and Mark Schankerman
Library of Congress subject classification: H Social Sciences > HG Finance
H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
Sets: Collections > Economists Online
Departments > Economics
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: 2377
Date Deposited: 28 May 2008 09:02
URL: http://eprints.lse.ac.uk/5104/

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