The DOI matches its Crossref record; 45 of the 45 references it cites were found in a registry or an index.
Financial Constraints, R&D Investment, and Stock Returns
Abstract
Through the interaction between financial constraints and R&D, I study two asset-pricing puzzles: mixed evidence on the financial constraints--return relation and the positive R&D-return relation. Unlike capital investment, R&D is more inflexible. A financially constrained R&D-intensive firm is more likely to suspend/discontinue R&D projects. Therefore, R&D-intensive firms' risk increases with their financial constraints. Conversely, constrained firms' risk increases with their R&D intensity. I find a robust empirical relation between financial constraints and stock returns, primarily among R&D-intensive firms. Moreover, R&D predicts returns only among financially constrained firms. This evidence suggests that financial constraints potentially drive the positive R&D-return relation. The Author 2011. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com., Oxford University Press.
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Cites
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Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints?
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Liquidity Risk and Expected Stock Returns
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Cited by
… and the Cross-Section of Expected Returns
Harvey, C. R., Liu, Y., & Zhu, H. (2016) · Review of Financial Studies · doi:10.1093/rfs/hhv059 · Cited by 2,119
Hou, K., Xue, C., & Zhang, L. (2020) · The Review of Financial Studies · doi:10.1093/rfs/hhy131 · Cited by 989
Hsu, P.-H., Li, K., & Tsou, C.-Y. (2020) · SSRN Electronic Journal · doi:10.2139/ssrn.3578215 · Cited by 665
Chen, Y., Yang, S., & Li, Q. (2022) · Finance Research Letters · doi:10.1016/j.frl.2022.102956 · Cited by 149
Metadata
- Authors
- Li, D.
- Venue
- Review of Financial Studies
- Publisher
- Oxford University Press (OUP)
- Published
- 2011-06-03
- Volume
- 24
- Issue
- 9
- Pages
- 2974-3007
- ISSN
- 0893-9454 (ISSN-L)
- 1465-7368
- OpenAlex
- W3122815320
- Cited by
- 482
- References
- 45
- FWCI
- 26.70
- Type
- journal article
- Language
- en
- Open access
- closed
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
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