The effects of taxes and organizational variables on research and development intensity

B. Anthony Billings, Yitzhak Fried

Research output: Contribution to journalArticle

Abstract

Prior research has failed to reach consensus on which variables explain private-sector research and development (R & D) spending. This study extends prior research explaining R & D spending of firms in the US private sector by regressing R & D intensity on a number of tax and organizational variables. COMPUSTAT data from 113 firms in 1994 are used to estimate the effects of the variables on R & D intensity (used interchangeably with R & D activity). Ordinary least square estimates indicate that firms that were eligible for the R & D credit had higher R & D activity than firms that were ineligible. R & D intensity is a decreasing function of both capital intensity and the debt to capital ratio. Neither management stockholding nor diversification strategy meaningfully influenced R & D activity. The reported results have implications regarding US tax policy towards the tax subsidy for R & D. The results also help to clarify prior findings regarding a number of organizational variables on
Original languageEnglish
Pages (from-to)289-299
JournalR and D Management
StatePublished - Jul 1 1999

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