Positive Study On Relationship Between R&D Spending, Capital Structure And Growth Of Firms

In the time of knowledge-driven economy, more and more firms realize that they must develop their core technology. According to the statistics of national investigation, we can see R&D investments, which represent the ability of innovation, are much lower than that of the average level of the world. In order to know more about the actual situation of R&D investments of firms in china, we make following empirical studies:(1)The influence of R&D investments to capital structure of firms.(2)The influence of R&D investments to growth of firms.(3)Whether there is some difference between firms between intensive-R&D firms and non-intensive R&D firms.The paper, using 246 observations of listed manufacturing firms between the years 2002~2004, analyzes the results of regression and provides the following empirical results: The intensive-R&D firms will lower asset liability ratio in order to avoid higher capital cost. In a short term, the R&D investments have an ambiguous influence to the growth of firm. When it comes to the influence of capital structure to the growth opportunity (using MB as the proxy variable), there is no difference between intensive-R&D firms and non intensive-R&D firms. But, the capital structure of intensive-R&D firms, comparing non-intensive R&D firms, has a less influence to the growth (using rate of increase in sales).