This study investigates the effects of financialization on research and development (R&D) investment by nonfinancial corporations (NFCs) in Korea from 1994 to 2009. The results indicate that increased dividend payments and stock buybacks impeded R&D investment by reducing internal funds and planning horizons. In addition, increased financial investment and profit opportunities crowded out R&D investment by influencing managers' incentives. Further, estimation results obtained by dividing the sample period into before and after the 1997–98 Asian financial crisis (AFC) indicate that the progress of financialization had a negative effect on R&D investment only after the AFC.