Evaluation of Financial Distress Costs of Innovative Companies

  • Elena Y. Makeeva National Research University Higher School of Economics, Moscow, Russia https://orcid.org/0000-0002-5821-4496
  • Margarita O. Khugaeva Financial University under the Government of the Russian Federation, Moscow, Russia


Over the last few decades investments in research and development (R&D) projects have risen significantly. Many experts have found a positive relationship between R&D expenses and a company’s value. However, investments in innovations are characterized by a high level of uncertainty. Often innovations generate income only in long run. These factors increase the probability of firms’ financial distress considerably. Thus, the aim of the present paper is to evaluate financial distress costs at companies that invest in research and development projects. The study covers 389 innovative firms over the period from 2006 to 2015. The analysis is based on a direct and indirect costs evaluation. The first are estimated through panel logistic regression. Indirect costs are calculated as unexpected losses or profits relative to industry indicators. The paper confirms the existence of relation between R&D expenses and financial instability. The results of the research show that the total financial distress costs of innovative companies amount to 7.95% of total assets or 11.78% of the value of a company on average.


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Как цитировать
Makeeva, E. Y., & Khugaeva, M. O. (2018). Evaluation of Financial Distress Costs of Innovative Companies. Российский журнал менеджмента, 16(1), 37–62. https://doi.org/10.21638/11701/spbu18.2018.102
Теоретические и эмпирические исследования