Further Analyses on Corporate Research & Development Intensity for Firms Listed on the KOSDAQ Stock Market

Purpose– Currently, domestic corporations, inclusive of KOSDAQ-listed firms, seem to be more involved in making active R&D investments against the unprecedented shortages of core components regularly imported from other nations. Therefore, it may be essential to identify financial determinants of corporate R&D intensity, which may be effectively applied to search for the optimal level of corporate R&D expenditures to enhance corporate value. Design/methodology/approach–Three hypotheses were tested by employing KOSDAQ-listed firms between the years of 2010 and 2018. Various methodologies for estimation were also applied to derive robust results for each relevant hypothesis. Findings–Three proposed variables, R&D intensity made in the prior year, interaction terms between the R&D intensity made in the previous year and classification of high-tech industry, and growth potential, reveal significant effects on current R&D intensity across the models. Moreover, eight variables show discriminating power between the years of 2011 and 2015, whereas only two variables were statistically different during the second subsample period. Research implications or Originality– Results are anticipated to shed new light on identifying new financial catalysts to attain to an optimal level of R&D intensity, given the trade-off relationship between the benefits and risks of corporate R&D expenditures in the theory of modern finance.