Determinants and Persistence of Research and Development Investments Evidence from Malaysia
International Journal of Emerging Markets, Vol. 4 No. 3, pp. 275-292, 2009
18 Pages Posted: 16 Oct 2012
Date Written: 2009
Purpose – The purpose of this paper is to investigate the determinants and persistence of research and development (R&D) investments in Malaysia.
Design/methodology/approach – The approach involves a regression analysis.
Findings – The regression analysis shows that lagged absorbed slack defined as the ratio of selling and administrative expenses to total sales and sales growth have positive affect on the R&D expenses, whereas diversification has negative impact on R&D expenses after controlling for leverage and profitability of the firms. Persistence in the firm-level R&D expenses is found. Occasional tendency among firms to cut down R&D spending over the period of 2000-2005 is found.
Research limitations/implications – Sample size is a limitation.
Practical implications – The findings have implications for the corporate governance and innovation charter of the firms.
Originality/value – The paper provides useful information from Malaysia regarding the determinants and persistence of R&D investments.
Keywords: Research and development, Chief executives, Stock options, Malaysia
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