Identifying intertemporal relationships in corporate R&D expenditures

This study empirically estimates the determinants of the research and development, dividend, investment, and financing decisions of 303 firms during the 1978–1982 period. Composite variables are constructed to gain insights into the intertemporal relationships among the firm financial decision variables. This study adds to the literature on financial planning by providing empirical estimates of tradeoffs among decision variables and incorporating these relationships into a model that sets R&D, dividend, financing, and investment policies in a manner that is consistent with stock price maximization.