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This study aimed to identify the most effective financing model by analyzing the internal and external factors influencing companies. We compiled data from 159 companies spanning 2012 to 2021, encompassing 1,590 company-years, to test 14 hypotheses. These hypotheses were evaluated using Structural Equations Modeling (SEM) with SmartPLS4 software across 3 distinct models. The financing model was categorized into 3 components: internal financing, short-term external financing, and long-term external financing. The findings revealed that the following factors significantly impacted all three types of financing: 1) Board of Directors’ characteristics; 2) Audit characteristics; 3) Internal control characteristics; 4) Ownership structure; 5) Managerial characteristics; 6) Financial reporting quality; 7) Financial performance; 8) Market performance; 9) Investment efficiency; 10) Competitive strategies; 11) Corporate social responsibility; 12) Political communication; 13) Economic uncertainty; and 14) Firm characteristics. Notably, economic uncertainty was found to exert a negative and significant effect on financing across all three dimensions, while the other variables positively facilitated company financing. Furthermore, the analysis indicated that the selected structures had greater explanatory power for long-term financing compared to internal and short-term financing as evidenced by the determination coefficients of all three models.

AbstractOne of the key factors for the development and stability of countries' economies is the creation of a suitable financing system for companies. The financing system of the companies should be updated and optimized should provide an appropriate response in face of various opportunities and threats. In the last decade, companies in the country faced two major crises, the intensification of sanctions and Covid-19, which seems to have had a profound effect on their financing. In this regard, the present study identified the dimensions affecting the development of the financing system of companies by comprehensively studying the research literature and then experimentally tested the proposed model under the influence of sanctions and covid-19 using the structural equation method. In other words, this study sought to answer the challenge of how the effectiveness of the financing model is influenced by the sanctions and covid-19.For this purpose, the data of 159 companies during the years 2013 to 2022 (1590 companies-years) were compiled to examine 14 hypotheses and were tested using the structural equation method using SmartPLS4 software in the form of three separate models.The financing model was divided into three parts: internal, short-term external and long-term external.The results of the research showed that the sanctions and covid-19 crisis have an effect on audit characteristics, financial performance, market performance, investment efficiency, political Communication on internal financing through retained earnings, as well as the effect of financial performance, market performance, investment efficiency, political Communication and Corporate characteristics significantly reduce short-term and long-term external financing and increase the impact of economic uncertainty on internal financing through retained earnings and short-term and long-term external financing.Finally, based on the determination coefficients of all three research models, it was determined that the selected structures have more explanatory power for long-term financing than internal financing and short-term financing.

A crucial role in the continuation of economic activities is played by the financing of services and production in supply chains. A key element of optimizing the financial flow of these complex networks is to pay attention to the financial aspects of these complex networks since they are becoming more and more complex and expanding. This study aims to investigate the supply chain of a pharmaceutical company's holding company and its subsidiaries while using internal resource valuation to develop a new strategy for financing the company's operations. There is a process of money circulation through the chain, which consists of passing through two treasuries (primary and secondary), which provide liquidity to compensate the deficits of some institutions with the excess liquidity of other institutions. In this article, we present three simulation-based models based on a case study conducted at Shafa Darou Investment Company in Tehran-Iran, a leading pharmaceutical investment company in the country, to examine the impact of implementing this idea in the real world. Considering the study's results, it has been shown that the supply chain as a whole has improved in terms of its working capital. Using a set of local treasuries is generally associated with reducing risks and a greater level of stability when relying on the excess liquidity of chain members provided that financial independence from external institutions, such as banks, is maintained. In addition, if the members' excess liquidity is deposited in a set of local treasuries rather than a bank, the profit and internal financial flow within the chain will be circulated throughout the chain, and more added value will be generated. [ABSTRACT FROM AUTHOR]

From a perspective of coordinating fiscal and monetary policies, this study constructs the government innovation subsidy indicator using the text search method, and examines the impact and mechanisms of government innovation subsidy on corporate research and development (R&D) investment, then investigates how expansionary monetary policy influences this effect. We find that government innovation subsidy can be a booster for corporate R&D by reducing corporate debt financing cost and increasing internal financing, and loose monetary policy suppresses the positive effect of government innovation subsidy on corporate R&D investment. This study offers macroeconomic policy implications that support corporate innovation. [ABSTRACT FROM AUTHOR]

This article uses the leading firms of the German chemical industry as a case study to provide a detailed example of how companies in the late nineteenth and early twentieth century used internal financing as an instrument of corporate finance. It traces the at first diverse significance of internal financing for the industry and identifies two moments of market concentration that triggered a convergence of corporate finance by a harmonisation of accounting standards that were not predefined by legal frameworks. The article argues that secret reserves and further ways of internal financing were key components of this harmonisation. The industry-wide creation of secret reserves cloaked the companies' actual financial strength from outsiders who were merely left with an image of the respective firms that was carefully drafted by companies' managers. [ABSTRACT FROM AUTHOR]

Information technology is playing a key role in the rising economies of the world. Today, in the era of information technology, the world is witnessing tremendous advancements in technology every day. So, the main aim of the study is to know the impact of internal financial sources and investment in information technology on performance of firms in urban areas. A sample of 500 respondent firms from Punjab, Haryana, and Himachal Pradesh in the healthcare services and hospitality sector have been considered. To reach the target population, judgmental sampling technique has been used. Multiple regression technique has been applied to analyse the results. The study found that the independent variable investment in information technology has a positive impact on the operational performance. So, it is suggested that more and more investments in operational performance will enhance entrepreneurial performance and also help in survival and generating profits. In future, more studies can be carried out on human capital and financial performance of a firm. [ABSTRACT FROM AUTHOR]

• Financing constraints positively affect digital transformation washing. • Digital transformation washing fails to alleviate external financing constraints. • Digital transformation washing leads firms to rely more on internal financing. This study investigates the drivers and consequences of digital transformation whitewashing (DTW) among Chinese manufacturing firms from 2010 to 2021. We find that financing constraints have a robust and significant positive impact on DTW, an effect that is more pronounced for firms located in provinces with lower marketization or operating in industries with lower levels of monopoly. Regarding economic consequences, our results indicate that DTW fails to alleviate external financing constraints, instead causing firms to increasingly rely on internal financing. [ABSTRACT FROM AUTHOR]

The promotion of wind power is an important strategic measure to promote energy transformation and achieve carbon neutralization in China. Driven by a series of industrial policies, China's wind power industry is still faced with the dilemma of "large quantity yet poor quality". Therefore, the paper considers as research object the wind power industry policies issued by the government of China between 2008 and 2019, and evaluates their impact on the innovation quality of enterprises from the perspective of financing modes. The results show that different categories of industry innovation policies and their combination have an important positive influence on enterprise innovation quality. There are differences in the regulatory effects of different financing modes on wind power industrial policy and enterprise innovation quality: internal financing inhibits the effect of industrial policy on enterprise innovation quality, while external financing promotes the impact of industrial policy on enterprise innovation quality. Further analysis shows that different categories of innovation policies and their combinations have impacts on the innovation quality of both private and state-owned enterprises, and in many regions. Finally, based on the research results, there are recommendations for policy managers and micro enterprises to stimulate the innovation quality of wind power plants. • The paper evaluates wind power industry policies and their combination impact on the innovation quality of enterprises from the perspective of financing modes. • Different categories of wind power industry policies and their combinations have an important positive influence on enterprise innovation quality. • There are conspicuous differences in the regulatory effects of different financing modes on industry policy and enterprise innovation quality. • Different types of industry policies and their combinations have impacts on the innovation quality of both private and state-owned enterprises, and in many regions. • There are differences in the regulatory effects of different financing modes on industry policy and innovation quality of both private and state-owned enterprises, and in many regions. [ABSTRACT FROM AUTHOR]

Objective: Overconfidence is an interdisciplinary concept related to the possibility of misjudgment in psychology. More importantly, management overconfidence is a concept derived from behavioral financing. Overconfidence can define unfounded belief in one's cognitive abilities, judgments, and intuitive reasoning. Overconfidence is one of the most important personality traits of managers that affect risk-taking companies in prioritizing their financial resources in terms of cost. Companies prefer to use the domestic budget and then the external financial resources as a last resort to issuing new shares. Because managers with overconfidence feel optimistic about the profitability of their business, they assume the capital market is underestimating their stock. In cases where the entity needs financing, they prefer financing through issuing bonds instead of issuing shares and think they may increase the wealth of shareholders by choosing debt with a short-time maturity. Overconfidence is irrational behavior, and corporate executives express it when making business decisions. The purpose of this study is to investigate the relationship between overconfidence management and investment efficiency with emphasis on the mediating role of internal financing In the companies listed on the Tehran Stock Exchange, TSE, over the period 2009-2018. Methods: Data collection completed using modern software, financial statements of the TSE official website. To test the research hypotheses, we used a panel data model with Eviews software. In this research, the statistical sample consists of information and data of 101 companies from the TSE. This study tests five hypotheses. The logarithm of total assets was used to measure the control variable of company size, and the ratio of long-term debt to total assets to measure the financial leverage control variable. Also, the ratio of net profit to total assets was used to assess the control variable of return on assets, and the ratio of net profit to equity to assess profitability. Results: Overconfidence in management has a positive and significant relationship with internal financing. Internal financing has a positive and significant relationship with overinvestment and a negative and significant relationship with underinvestment. Internal financing does not have any mediating effect on the relationship between management overconfidence and investment efficiency. Control variables are firm size, financial leverage, return on assets, and profitability. The difference between earnings per share and real earnings per share measures the management distrust. The logarithm of the accumulated profit and legal reserves measure the variable of domestic financing, and investment efficiency is divided into two variables of over-investment and under-investment. Conclusion: As managers become more confident, their willingness to use internal resources increases, and as internal financing rises, managers tend to invest more. Manager's distrust is an essential factor in financing so that managers with overconfidence incline to raise domestic financing and investment more than others.

Corporate investment decisions are determined by a variety of factors, including various managerial measures, including overconfidence of managers, which are important determinants of corporate investment decisions. Most corporate executives prefer internal financing, but if internal resources are not sufficient to meet this need, they use external resources with the least degree of information asymmetry. The purpose of this study was to investigate the effect of managerial overconfidence on investment and the moderating effect of the internal financing method is on their relationship. The study consisted of listed companies in Tehran Stock Exchange during the period 2011 to 2016 and using a systematic elimination sampling method, 97 companies were selected. To investigate the research hypotheses, EVIEWS software and panel data regression method was used. The results of the research showed that managers’ overconfidence has a positive and significant effect on investment as well as underinvestment, but internal financing does not have a significant effect on the relationship between the overconfidence of managers and investment as well over-investment. But the effect of internal financing on the relationship between managers’ overconfidence and underinvestment was a significant positive. Finally, it became clear that internal financing had a significant negative impact on investment and over-investment.

Objective: One of the most important decisions of corporate managers is how to finance economic enterprises, which play an important role in the continuation and growth of their profitability. Numerous factors can affect companies' financing decisions, including the personality traits of senior managers. The purpose of this article is to investigate the effect of excessive self-confidence of managers on companies' financing working procedures in Tehran Stock Exchange. Method: The statistical population of this research is the companies listed in Tehran Stock Exchange and its statistical sample includes data of 139 companies during the seven-year period 2011-2017. The sampling method is systematic removal and the method used for estimating the model is multivariate regression method using estimation of combined data with fixed effects. Findings: The results showed that there is an inverse and significant relationship between excessive self-confidence of managers and financing through internal resources of the company, so that increasing self-confidence of managers reduces financing through internal resources of the company, so that increasing self-confidence of managers reduces financing through internal resources of the company. There is also a significant and direct relationship between managers' overconfidence and financing out of company, so that high self-confidence leads the corporate managers toward extra-organizational financing, and thus the amount of out-of-company financed resources increases. Conclusion: Overconfidence causes managers to fail to act rationally and misinterpret their accepted risk level. For this reason, overconfident managers may, contrary to expectations, be inclined to this type of financing despite the risk of out-of-company financing, and ultimately cause to increase the company's financial costs and reduce its profitability.

Objective: The purpose of this study is to examine the relationships between management overconfidence, internal financing, and investment efficiency in the companies listed in the Tehran Stock Exchange. Method: A sample of 130 companies was selected in the period 2007-2017. To measure investment efficiency, the indicators of over- and under-investment were rated. Also, to measure management overconfidence and internal financing, capital expenditures and retained earnings were assessed, respectively. Results: The findings showed that there is a positive relationship between management overconfidence and internal financing. Also, there are positive relationships between management overconfidence and investment level, and between management overconfidence and over-investment, and there is a negative relationship between the management overconfidence and under-investment. On the other hand, the results showed that there are positive relationships between internal financing and the investment level, and between internal financing and over-investment, and that there is a negative relationship between internal financing and under-investment. The results indicate that 1) internal financing has positive effects on the relationship between managerial overconfidence and the level of investment, 2) the interactive effect of internal financing on the relationship between the managerial overconfidence and over-investment is significant and positive, while the similar effect concerning under-investment is not significant. Conclusion: Existence of internal resources increases the motivation of overconfidence managers in using personal gain resources and leads to non-optimal investment behaviors. This process is done by increasing the levels of investment.

This study seeks to investigate the differences in firm managers’ preferences in the use of internal funding to meet working capital needs. The data to be analyzed are obtained from the results of the World Bank's Productivity and the Investment Climate Survey on firm managers in 98 developing countries, with a total sample of 1,235 firm managers. The analysis techniques used are linear regression and ordinal logit analysis. This study demonstrates the gender-based differences in the proportion of the use of internal funding sources. Female top managers prefer to use internal funding sources for working capital better than top male managers. This study not only provides a better understanding of the relationship between the existence of top female managers and the preference in the use of internally financed working capital but also informs firms that aim to balance the liquidity and the capital cost efficiency in managing their working capital to provide a more significant opportunity for women to occupy top management positions.

Objective: One of the most important decisions managers should take and one of the crucial components of every business unit operation is financing. Managers have the control over choosing the resource of financing and compared with external financing, internal financing is much easier for them. Choosing the optimal financing policy by managers plays an important role in risk and wealth creation for shareholders. Manager's over confidence is an important behavioual characteristic that affect the way managers invest, finance and decide on dividend policies. Managers prefer internal financing over external financing because they have more control on internal resources and then, when this is combined with risk-taking behavior of over confident managers they can affect the investment efficiency since they may stray from the optimal level of investment. On the other hand, if managers feel that corporate governance mechanisms constraint them or they have insufficient internal resources for investing, they may be reluctant to invest. The purpose of this study is to investigate the relationship between management over-confidence, internal financing and investment efficiency. Method: This is an applied reseach and it is a quasi-emprical research and its methodology is post-event research. This research investigates the real data of firms listed on Tehran Stock Exchange (TSE) and because of that its results are generalizable to the research population. In this research we have used systematic elimination method to chose the research sample. In order to test the research hypothesis, time priod of 2012 to 2018 were chosen and the multivariate regression model by combined data method was used obtain the results. Data from 188 firms were analyzed and we used Microsoft Excel and Eviews version 9 to analyze the data and extract research results. Results: The results of testing research hypotheses show that there is a negative significant relationship between internal financing and investment efficiency. It can be said that the benefits of internal financing has decreased the efficiency of firms' investment, an example of this benefits is the availability of internal resources. This availability cause managers to violate the optimum level of investment (over-invest or under-invest in projects). Also, there is a negative relationship between internal financing and over-investment and a positive relation between internal financing and under-investment. Putting into another words, in firms with under-investment, the level of internal financing is higher and the amount of external resources for financing decreases. So, the internal financing is one of the reasons we have underinvestment in firms. In addition, taking together the effects of management over confidence and internal financing, investment efficiency decreases. This results are consistent with research theoretical literature. In contrast to internal financing, external financing creates some limitations for managers and because of that managers are reluctant to finance through external resources. So, this is why the revel of investment strays form its optimum level. This results are in line with He et al (2019), Taghizade Khanqah & Badavar Nahandi (2020) and Faraji et al (2019). Conclusion: Internal financing is a factor that affect under-investment positively. So, based on managers control over internal resources and their concern about valuation of their firm by market, it is evident that they prefer to face minimally with control mechanisms and external regulation. In addition, it can be said that, it is not always for the best interest of firm and its shareholders to have a high degree of internal financing. Therefore stockholders should consider this in their analysis. Putting constraints on the level of internal financing (based on its effect on the level of investment by managers) by stake holders can affect the return of firm considerably. Also, the relationship between use of internal financing and the level of investment by managers and their over-confidence may be a two-way relationship. With an increase in the use of internal financing and the decreasion of over-investment and increasion of under-investment, the predicted income of projects and the firm in total may be decreased, that in this case the over-confidence of managers will in turn decrease again. [ABSTRACT FROM AUTHOR]

This research delves into sustainability within the road freight transport sector, focusing on how financing policies interact with the capital structures of haulage companies. Employing an agent-based model inspired by Sweden's freight sector, we simulate strategies for fleet replacement while considering financial health and balance sheets. Hauliers are portrayed as agents with financial attributes sourced from real-world financial statements. Their financing decisions are informed by pecking order theory. Through a series of scenario tests, we simulate the impacts of policy interventions on hauliers' transition trajectories. Our findings highlight the challenges associated with integrating electric trucks, attributed to limited financing avenues. Both internal and equity financing are found to be inadequate, while debt financing raises concerns about credit risks. These findings remain robust even when incentives like subsidies and reduced interest rates on loans are introduced. The study underscores the intricate interplay between financial factors and sustainable heavy-duty road transport. [ABSTRACT FROM AUTHOR]

Abstract Innovation should be followed by profitable commercialization to have a sustainable business. Teece (1986) identified that it is often not the innovator who introduces a new process, product or service who profits the most from an innovation, but instead suppliers, cooperators, customers and competitors. In emerging markets, especially in Indonesia, it is challenging to do innovation due to the lack of infrastructure. This study explores innovation-driven enterprise relationships with firm financial performance measures by firm profitability. To identify the innovation-driven enterprise financing capabilities and innovation, the study used company age, R&D expense, sales, sales growth, debt ratio and retained earnings as independent variables. Firm profitability performance was measured by return on assets (ROA). R&D expenses of innovation-driven enterprises had a positive correlation with firm financial performance. Sales and retained earnings had a positive correlation with R&D expense. However, company age, debt ratio and sales growth had a weak negative correlation with corporate innovation activities. Retained earnings had a positive correlation and was the biggest determinant of firm profitability. It was shown that innovation-driven enterprises in Indonesia are financing their innovation with retained earnings (internal financing) and not debt (external financing). Keywords: Innovation, sustainable business, financial performance, R&D expense, internal financing

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Although the extant literature on corporate finance has largely focused on capital investments, relatively less attention has been paid to identify how research and development (R&D) related investments are financed. This study empirically tests the relationship between the different financing sources used by firms and their intensity of R&D in the rapidly growing economy of China. Furthermore, we posit that the firm's choice to adopt the finance source for R&D will change if the firm is likely to be in financial constraints. This study finds out an empirical evidence that internally generated cash flows, bank debt, and seasonal public offerings (SPOs) stipulate a positive impact on R&D of Chinese firms, whereas the issuance of bond impacts it negatively. The study also confirms that financially constrained firms perceive the impact of financing sources on their R&D differently than non-financially constrained firms do. Results also slightly differ between high-tech and non-high-tech firms. [ABSTRACT FROM AUTHOR]

This paper aims to identify potential drivers behind China's rising corporate leverage, using an international aggregate panel dataset. We find strong evidence of significantly negative effects of the internally financed share of capital expenditure on the change of corporate debt/GDP: a rise in internally generated funds relative to gross capital formation consistently slows corporate debt buildup. While our core finding is robust to choices of benchmark models, control variables and data samples, this negative effect appears more pronounced in China's case. Our regressions also suggest more important roles played by real economic factors than monetary factors. While the investment rate contributes to rising corporate debt, a higher saving rate dampens corporate leveraging. Finally, we present some evidence of consistently negative impacts of government debt on corporate leveraging, suggesting possible interactions between corporate and government debts. Overall, our empirical evidence points to the declining investment efficiency as a possible important driver behind China's high and rising corporate leverage, in light of its high investment rate and low internally funded capex ratio. [ABSTRACT FROM AUTHOR]

The research deals with the relation between asset growth and stock return and also the role of financing resources in returns of firms with high or low asset growth. With an accurate study of literature, six hypotheses and a statistical sample of 96 firms listed in Tehran Stock Exchange for a seven-year period during 2005 to 2011 have been provided. Hypotheses were analyzed by multivariate regression and tests of F and t. Results obtained by hypothesis test show that there is a significant positive relation between asset growth and stock return of firms and there is a significant negative (positive) relation between internal & external financing and stock return of firms with high (low) asset growth. But relation of financing through bank and capital market with stock return of firms with high (low) asset growth is significantly positive (negative). In addition, the results show that there is no significant relation between the proportion of free float shares and stock return of firms with high asset growth, however, there is positive and significant relation between the proportion of free float shares and returns of firms with low asset growth.

• Corporate pension policies involve conflicting motives—shifting vs. managing risk. • Corporate governance affects how risk-shifting impacts future underfunding and R&D. • We use foreign ownership and stable ownership to gauge corporate governance quality. • Well-governed firms use risk-shifting to finance R&D and improve shareholder values. • Risk-shifting by poorly-governed firms increases pension deficits but not shareholder values. This study examines how corporate governance affects pension plan sponsors' conflicting motives—risk-shifting vs. risk management—and their future pension funding status, R&D investments, and shareholder values. We focus on managers' discretionary choices of expected rates of return on plan assets and discount rates for pension liabilities to capture risk-shifting motives and measure corporate governance quality through foreign equity ownership (strong monitoring) and stable equity ownership (weak monitoring). The evidence shows that well-governed firms use managerial risk-shifting to finance R&D and increase shareholder values. Risk-shifting by poorly-governed firms results in larger pension underfunding without increasing shareholder values. [ABSTRACT FROM AUTHOR]

Continuously, management of firm growth and directing through improving profitability are among fundamental apprehensions of the managers and selecting financial resource is of vital significance in this regard. On the other hand, both profitability and firm growth influence life cycle, and the relationship between them may be different in various phases of life cycle of companies. This research aims to answer to the questions of using domestic financial resources in order to provide financial growth by considering various phases of life cycle of companies listed on Tehran Stock Exchange. Therefore, among the listed companies, 85 companies were studied for the period 2007 to 2011. Multivariate regression model and analyzing panel data were used for hypotheses tests. The results show that there is a positive and significant relationship between profitability of past years and growth and the impact of profitability of past years on firm growth is different by changing intervals. On the other hand, internal financial resources as one the main resources of financing firm growth are used by companies. Moreover, findings show that the impact of life cycle of companies on firm growth in maturity period is more than the same for other phases of life cycle. In other words, companies which have used internal financial resources in recent years and they are in maturity phase, experience higher growth of sale.

Environmental protection firms need to improve their ability to access financing while maintaining good economic performance under mounting environmental pressures. After the integration of trade-off and stakeholder theories, we have constructed a number of mathematical models to investigate the relationship among financing decisions, environmental performance (EP), and economic performance. Unbalanced panel data from environmental protection companies listed on Chinese stock exchanges from 2007 to 2016 were collected and analyzed. Our results have confirmed that debt financing has a significant impact on short- and long-term economic performance. Firms prefer long-term debt over short-term debt to improve their financial sustainability. Internal financing is positively related to performance because the cost of financing is lower. Environmental performance can cause extra financial burden in the short run, but will improve stakeholder relations and profitability in the long run. Our study suggests that environmental performance affects the relationship between financing decisions and economic performance. When EP initiatives are high, debt financing has a greater negative influence on short-term performance, and the effect on long-term performance is mitigated. High EP also reduces the impact of internal financing on performance. [ABSTRACT FROM AUTHOR]

Micro, Small, and Medium-size enterprises might evolve development processes, experience different evolving stages and because they are privately held, might lead them to change financial priorities, choice and capital structures, eventually. The capital structure of firms might be influenced by a variety of factors and internal financing and equity applications might differ. In this study, we surveyed 148 private firms in Manisa and delivered data from 2013-2014 and analyzed capital structures, determined its influencing factors. We find that, (a)the debt structure of firms formed by accounts payable financing intensively (b) auto-financing do not increase by SME scales, (c) the capital structure of SME's are affected by firm size, tangibility, profitability and cost of debt. [ABSTRACT FROM AUTHOR]

We examine the impact of corporate innovation strategy on analyst following and forecasting performance, as well as the associated economic consequences. Using a sample of US firms from 1992−2012, we find that firms pursuing an exploration-oriented innovation strategy (as opposed to an exploitation-oriented innovation strategy) are associated with lower analyst coverage, higher forecast error and dispersion. The effect is less pronounced for firms with greater disclosure of innovation activities, and for firms followed by analysts with more firm-specific experience. We also examine how innovation strategy affects the perceived credibility of analyst forecasts and find that investors appear to be less responsive to forecast revisions issued for exploratory firms. Such firms also incur a higher level of cash holdings, greater internal financing, and lower dividend ratio. The findings of this paper advance our understanding of how a public company's choice of innovation strategy affects its performance in the capital markets as well as the associated economic consequences. [ABSTRACT FROM AUTHOR]