The Effects of R&D Expenditures on Bondholders in Listed Firms

Research and development (R&D) investment is a kind of strategic behavior filled with high uncertainty and risk. Currently domestic relevant research on the R&D input value mostly emphasizes the enterprise R&D investment impact on shareholder wealth, and less about the trade-off between...

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Bibliographic Details
Published in2013 Fourth International Conference on Intelligent Systems Design and Engineering Applications pp. 642 - 645
Main Author Zhang Bingying
Format Conference Proceeding
LanguageEnglish
Published IEEE 01.11.2013
Subjects
Companies
Correlation
Finance
humanities ecological building
Investment
Stock markets
Technological innovation
the cultural ecological environment
university buildings ecology
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DOI10.1109/ISDEA.2013.553

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Summary:Research and development (R&D) investment is a kind of strategic behavior filled with high uncertainty and risk. Currently domestic relevant research on the R&D input value mostly emphasizes the enterprise R&D investment impact on shareholder wealth, and less about the trade-off between R&D investment impact on bondholders and shareholders. The present study uses revealed 42 listed Companies' R&D spending in 2007-2011 as the sample to examine the impact on firms stock value and debt value from the perspective of protecting the interests of bondholders. The results show that: For firms with high default risk, R&D increases have a positive impact on bond risk premium. Further, there is a wealth transfer from bondholders to stockholders. Neither of these results is found for firms with low default risk.
DOI:10.1109/ISDEA.2013.553