Strategic Planning and the Investment-Financing Behaviour of Major Industrial Companies

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Abstract
The hypothesis that firms simultaneously determine their research and development, investment, dividend and effective-debt policies generally is substantiated in the financial literature. The determinants of research and development, dividend, investment and financing decisions of 303 firms are estimated econometrically during the 1976-1982 period. Moreover, an optimization model is estimated for a firm that seeks to minimize underachievement of desired investments, dividend and R&D and minimize the underachievement of desired effective debt. Management gains additional insights to increase the achievement of maximizing research and development expenditures at the expense of paying dividends and undertaking investments.

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