Publication Type
Journal Article
Version
publishedVersion
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
Citation
DAVID, Parthiban; O'Brien, Jonathan P.; and YOSHIKAWA, Toru.
The implications of debt heterogeneity for R&D investment and firm performance. (2008). Academy of Management Journal. 51, (1), 165-181.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/2909
Copyright Owner and License
Publisher
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.5465/AMJ.2008.30772877