Measuring Innovation Success by Forecasting R&D Investment Using Financial Leverage

The aim of the present study is to investigate the impact of the success of R&D innovation on the relationship between R&D investment and financial leverage. This research is descriptive in nature and methodology, and it is applied research in terms of its objective. Given that this study analyzes the current status of variables using data collected from past information, it is classified as descriptive and ex post facto research. In conducting this study, two hypotheses were formulated. A sample of 115 companies was selected through systematic elimination sampling for a six-year period from 2017 to 2022. The collected data related to the research variables were analyzed using Excel and EViews software, version 10. The correlation results indicate that financial leverage has a negative relationship with R&D investment and a positive relationship with the market-to-book value ratio. The success of R&D is positively associated with R&D investment, and variance in profit and company size show a positive correlation with company performance. Additionally, the regression analysis results reveal that financial leverage alone has a significant negative effect on R&D investment. The success of R&D alone has a negative but non-significant effect on R&D investment. The interactive effect of financial leverage and R&D success is positive and significant, meaning that when companies achieve success in R&D, the negative effect of financial leverage on investment decreases. Other control variables, such as company size, company risk, company performance, etc., do not have a significant impact on R&D investment. Overall, the regression model is statistically significant. Generally, the findings indicate that the success of R&D activities can partially mitigate the negative impact of financial leverage on R&D investment. In summary, the results suggest that financial leverage alone has a negative effect on R&D investment, but when a company experiences R&D success, the negative effect of financial leverage diminishes.