The Impact of R&D Innovation Success on the Relationship between R&D Investment and Financial Leverage

This paper explores the interrelationship between R&D investment, financial leverage, and a firm’s innovation success. Using sample of UK EU firms, we predict that changes in one-year-ahead investment are negatively associated with leverage current period. Crucially, also this negative association is positively moderated by extent to which firms successful generating commercially viable technically feasible innovations from their work. We use insights International Accounting Standard (IAS) 38: Intangible Assets measure Our empirical findings offer strong support for each our theoretical predictions. Consequently, contribute extant literature demonstrating success influences how finance subsequent investments R&D. work shows accounting disclosures have potential play an important role open networks.