R&D Intensity and Corporate Financial Policy: Some International Evidence

This paper presents evidence on the financial policies of firms strongly engaged in research and development activities. By referring to the under‐investment paradox, the asset substitution problem, the asset specificity proposition and the information asymmetry literature, we postulate that R&D‐intensive firms should adopt specific financial policies. In conformity with our hypotheses, empirical results based on a sample of R&D‐intensive and non‐R&D firms in four major industrialized countries (Europe, the UK, Japan and the US) show that R&D‐intensive firms exhibit significant lower debt and dividend payment levels, but shorter debt maturities and higher cash levels than non‐R&D ones.