FINANCE Corporate financial policy and R and D Management

DIVL = last year’s dividends/sales

CAK = increase in net working capital/sales

PK = profits/capital stock

D2sales = two-year change in sales

IK = investment/capital stock

DS = dividends/sales

IS = capital investments/sales

FS = external funds issued/sales

RDS = R&D/sales

The F-statistic shown in Tables 6.1 through 6.21 is an overall statistic re-
garding the goodness of fit of the regression. The Adj R2 denotes the per-
centage of variance in the dependent variable and is associated with the
variances in the independent variables.
In the world of business during the past 30 years, net debt issues
have accounted for about 80 percent to 90 percent of new capital issues.
Here we present the estimation of a simultaneous equations system of
the largest capitalized firms during the 1952–2002 period using the
WRDS database.
The following is a summary of the hypothesized equation system:

DS = F(IS, RDS, CAK, FS, LDIV, PK) (6.2)

IS = F(DS, RDS, FS, CAK, PKL, D2sales) (6.3)

FS = F(IS, RDS, DS, PK, DEP, INTE, DE) (6.4)

RDS = F(LRDS, IS, DS, FS, PK) (6.5)

The Model 95