Publication Type

Journal Article

Publication Date

2-2008

Abstract

An assumption in prior research is that debt is homogeneous and provides inappropriate governance for R&D investments. We argue that debt is heterogeneous: although transactional debt does indeed impose strict contractual constraints that provide inappropriate governance for R&D investments, relational debt has very different characteristics that provide more appropriate governance. Using a sample of Japanese firms, we find that firms that align their debt structures with their R&D investments perform better than those that are misaligned. Furthermore, firms tend to align their debt structure with R&D investments, but only after deregulation permits relatively free access to various types of debt.

Keywords

Capital structure, institutional investors, corporate governance, development projects, cost, innovation, strategy, agency, boards, US

Discipline

Corporate Finance | Strategic Management Policy

Research Areas

Strategy and Organisation

Publication

Academy of Management Journal

Volume

51

Issue

1

First Page

165

Last Page

181

ISSN

0001-4273

Identifier

10.5465/AMJ.2008.30772877

Publisher

Academy of Management

Copyright Owner and License

Authors

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

http://doi.org/10.5465/AMJ.2008.30772877

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