What matters more in R&D and Capital Expenditures Financing by Japanese Firms: MULTINATIONALITY OR B

In this paper, we investigate the relation between cash flow, debt, investment and performance according to whether the firm is multinational (versus domestic), keiretsu (versus independent) or both multinational and keiretsu. Using a Japanese sample of 3024 firmyear observations in the period 2000 to 2002, the results shed lights on the association between financing, investment and performance in the Japanese context. First, they suggest that cash flow is the principal source of financing of both tangible and intangible investment. Second, we find that firms which are both multinational and keiretsu are the most constrained ones regarding capital investments. Finally, for both multinational and domestic firms, bank affiliation alters the relationship between R&D and performance as well as between capital investment and performance.