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Investment and Performance of Firms: Correlation or causality?
KTH, School of Industrial Engineering and Management (ITM), Industrial Economics and Management (Dept.), Economics.ORCID iD: 0000-0002-5871-8571
2008 (English)In: Corporate Ownership & Control, ISSN 1727-9232, Vol. 6, no 2, 268-282 p.Article in journal (Refereed) Published
Abstract [en]

This paper provides an empirical analysis of the two-way causal relationship between investment and performance indicators at the firm level. The performance variables include sales, value added, profit, cash flow, capital structure and employment. The investment variables are research and development and physical capital. A multivariate vector autoregressive approach is applied to a panel of Swedish firms observed between 1992 and 2000. Results show evidence of some two-way causal relationships, which are mainly transitory in character. Significant heterogeneity is observed in the firms’ investment and performance behavior by their size.

Place, publisher, year, edition, pages
Virtus InterPress, 2008. Vol. 6, no 2, 268-282 p.
Keyword [en]
R&D investment, productivity growth, financial constraints, panel data
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URN: urn:nbn:se:kth:diva-64147OAI: diva2:483022
Qc 20120126Available from: 2012-01-26 Created: 2012-01-24 Last updated: 2012-01-26Bibliographically approved

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