Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
The Impact of R&D Investments on The Capital Structure of Swedish Public Life Science Companies
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
2010 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesisAlternative title
FoU Investeringar och Kapitalstruktur: En Studie av Svenska Life Science Företag (Swedish)
Abstract [en]

Background Although the impact of R&D investments on firms’ capital structures has been the subject of extensive research, the “capital structure puzzle” still remains unsolved. Previous research is not entirely unanimous on this subject. While some studies indicate that R&D intensive firms are less levered, other studies depict the opposite.

Aim This study aims to investigate the impact of R&D investments on the capital structure of firms in the Swedish life science industry. The life science industry is especially of interest as it is characterized by fast decisions regarding the success or failure of clinical trials, approval of products by the authorities and the development of pipeline products. Such factors contribute to a fast-paced environment in which investment decisions must be made cautiously.

Methods A comparative case study analysis is conducted on five publicly listed life science companies, Meda, Q-Med, BioPhausia, Vitrolife and Biotage, trading on the Nordic OMX Stockholm Stock Exchange. Each company’s financial performance and position have been considered and analyzed during the period 2005-2009. Financial ratios relating to the R&D intensity and the capital structure of the firms have been selected in addition to other determining factors; company size, profitability, asset tangibility, non-debt tax shield, growth, income variability and dividend policy. Moreover, key informants, including CEOs/CFOs of some of the firms involved, have scrutinized our results.

Results Meda and BioPhausia were found to be the least R&D intensive firms in the sample with R&D intensities of 3 % and 1 % respectively and the highest levered with debt levels (total debt over total capital) of 53 % and 50 % respectively. Q-Med, Vitrolife and Biotage were the most R&D intensive with 19 %, 14 % and 10 % of their sales reinvested in research and development and the least levered with debt levels of 5 %, 7 % and 8 % respectively.

Conclusions Our findings show a negative relationship between the analyzed firms’ R&D intensity and their leverage level. Moreover, the three most R&D intensive firms displayed a reduction in leverage with increasing R&D intensity.

Place, publisher, year, edition, pages
2010. , p. 53
National Category
Business Administration
Identifiers
URN: urn:nbn:se:uu:diva-143742OAI: oai:DiVA.org:uu-143742DiVA, id: diva2:392784
Uppsok
Social and Behavioural Science, Law
Supervisors
Available from: 2011-01-28 Created: 2011-01-24 Last updated: 2011-01-28Bibliographically approved

Open Access in DiVA

fulltext(935 kB)1282 downloads
File information
File name FULLTEXT01.pdfFile size 935 kBChecksum SHA-512
58a0f07565e75c189b86fd601cf4ae4aa8d59dce135789636828670ae5204daac8653245796840972a63d84bc7c86580ed36aba88ae3157a54a37ebc5d3b797f
Type fulltextMimetype application/pdf

Search in DiVA

By author/editor
Ridha, MaithamBajka, Daniel
By organisation
Department of Business Studies
Business Administration

Search outside of DiVA

GoogleGoogle Scholar
Total: 1282 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

urn-nbn

Altmetric score

urn-nbn
Total: 829 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf