FINANCE Corporate financial policy and R and D Management

ing the NSF/Census data for the Compustat data. Because of the losses in
sample size due to the pairwise matching of firms and the reduced time
frame (1978–1982 vs. 1975–1982), it is necessary to examine changes in
the results due to sample size and time frame reduction, as well as those
due to differences in data sources. These results are presented in Tables 7.3
through 7.6.
When the R&D expenditures equation (Table 5.3) is reestimated using
the reduced Compustat sample (a decrease from 303 firms to 158–188
firms), the model that most closely fits the data is:

The rationale for this judgment is that, in order to be retained in the
model, a variable must be statistically significant and have the same sign in
at least three of the five periods studied. Applying the same criteria to the
NSF/Census data yields the following result:

CENS(78 82− ): R& D = ( R& D)− 1

+

f t

RCOMP(78 82− ): R &D = R & D−−− 123 R & D R & D

+++

f(, , )tt t

Financial Decision Estimation Results 189

TABLE 7.3 Comparative Two-Stage Regression Results. Dependent Variable:
R&D Expenditures (R&D)

Constant RDr–1 RDt–2 RDt-3 NI DEP EF CE DIV

1978: 303 0.000 1.454 –0.050 –0.317 –0.036 –0.004 –0.012 0.013 –0.134
188 Cens 0.000 0.511 0.502* –0.107 0.001 0.020 –0.002 –0.012 0.056
188 Comp 0.002 0.956 0.093 –0.076 0.008 0.028 –0.001 0.001 –0.012
1979: 303 0.000 1.490 –0.223 –0.190 0.042 0.012 –0.010 0.033 –0.177
180 Cens 0.018 0.968 –0.213 0.267 –0.171 –0.302 –0.144 0.198 0.120
180 Comp –0.001 0.759 –0.551 0.845 0.002 –0.010 –0.013 0.023 –0.020
1980: 303 –0.001 1.378 –0.046 –0.272 0.074 0.002 –0.008 –0.005 –0.169
177 Cens –0.001 0.890 0.022 0.127 –0.001 0.048 –0.026 –0.015 –0.014
177 Comp –0.061 –0.537 0.546 0.994 0.012 0.038 –0.018* –0.013 0.009
1981: 303 0.000 1.476 –0.238 –0.242 0.028 0.020 –0.000 0.001 –0.041
161 Cens 0.002 0.653 0.376 0.069 –0.003 –0.010 –0.050 0.0012 –0.066
161 Comp –0.001 1.119 –0.397 0.294 –0.005 0.019 –0.019 –0.011 0.014
1982: 303 –0.019 2.382 –2.379 0.030 –0.061 0.225 0.030 –0.084 0.853
158 Cens –0.000 0.630 0.108 0.265 –0.008 0.020 –0.024 –0.003 0.102
158 Comp –0.001 1.088 –0.573 0.469 –0.016 0.097 –0.009 0.012 0.091

*Significant at 5% level.
**Significant at 10% level.
Cens—Census R&D database used in analysis.
Comp—Compustat R&D database used in analysis.