High R&D investment leads to lower leverage for Indian firms.
The study looked at how companies in India that invest more in research and development (R&D) tend to have less debt. They analyzed data from manufacturing firms in India from 1995 to 2005. The results showed that firms focusing on R&D have lower debt levels. Interestingly, this effect was strongest for foreign private companies. On the other hand, state-owned firms with higher R&D activity tended to have more debt.