An Empirical Study Of The Relationship Between Research And Development Investment And Corporate Financial Policy

In this study, we explored the relationship between research and development activities and corporate financial decision in terms of the Pecking Order theory. Also we compared the result of foreign empirical study. We want to see the influence of R&D intensity on financial decision, and to find if the financing behavior of the companies in Chinese Electronic and Information presents a pattern as Pecking Order theory predicted.In this study, data were derived from financial reports of stock issuing companies in Chinese Electronic and Information from 2000 to 2004.The empirical results are summarized as follows: First, R&D intensity significantly associates negatively with debt ratio, means the higher R&D intensity companies are likely to prefer equity financing to debt financing resulting in lower debt levels. Second, about the measures of debt maturity, higher R&D intensity companies exhibit less short-term debts. Third, about the measures of dividend payment levels, R&D intensity don't exhibit statistically significant correlation with dividend payment levels. Last, R&D intensity significantly associates positively with the level of cash held, means the higher R&D intensity companies are likely to hold the internally-generated funds to support the future require of funds.