The Association of Three Types of Cash Flows and R&D Investment

This paper investigates the relevance between R&D investment and operating cash flow(cash flow from operating activities), investment cash flow(cash flow from investment activities), and financial cash flow(cash flow from financing activities) over the period of 2000-2008 in Korean security market. Especially, the study splits samples into several groups by firm size and technology level. Empirical results show while operating cash flow is positively related to R&D investment, investment cash flow and financial cash flow are negatively associated with R&D investment. This results suggest that operating cash flow is the most important source of R&D investment among three types of cash flows in cash flow statement. The result also indicate that the relevance between three types of cash flows in cash flow statement and R&D investment differs according to firm size and technology level.