The determinants of R&D smoothing with asset sales: Evidence from R&D-intensive firms in China

Research and development (R&D)-intensive firms have strong incentives to maintain a smooth path for their R&D investments; otherwise, they will incur high adjustment costs. Examining data covering 2009 2016, we find that Chinese R&D-intensive firms, especially those with innovation efficiency, tend sell operating financial assets protect value-enhancing investments. However, constraints adverse impacts on smoothing asset sales unless the efficiency. The results suggest efficiency offers even financially constrained ones, motivation covert proceeds into inputs, as from provide less-costly substitute external financing. Given importance of economic growth limited financing opportunities in emerging capital markets like China, our findings reveal new insights regarding • We examine determinants sales. intensive are found investments by selling assets. Financial prohibit adopting strategy. Firms more inclined adopt Innovation is regarded major incentive