Search results

This study aims to investigate whether research and development (R & D) expenditures drive future innovation in the chemical industry.

This study examines the relation between R & D expenditures for the period of 2000-2002 and the innovation effect measured by the Malmquist Productivity Index (MPI) for the period of 2003-2005. Under the MPI, the innovation effect is measured as the “shift” in a firm’s production frontier between two periods (2003-2005).

Results indicate that there is a significant and positive relation between R & D expenditures and future innovation among chemical firms.

This study should be of interest to financial accounting policy makers, R & D-intensive companies and investors. To policy makers, they may consider the possibility of permitting R & D-intensive companies to recognize R & D expenditures as assets. In other words, R & D-intensive companies can capitalize and amortize their R & D expenditures, as R & D expenditures can bring them future economic benefits. To R & D-intensive companies, the results may encourage them to keep up their R & D activities. Moreover, this study can increase individual investors’ confidence in investing companies with high-level R & D activities in an R & D-intense industry.

Fundamental shifting of the world toward intangible intensive economy raised an apprehension regarding value relevance of internally generated intangible assets. In the previous studies, research and development (R&D) expenditure is recognized as a significant accounting item, which can indicate potential internally generated intangible assets. This study aims to examine whether investors consider nature of intangible intensity of a firm for the evaluation of R&D expenditure to determine equity values in India.

The authors compared value relevance of capitalized and the expensed portion of R&D expenditure between intangible- and non-intangible-intensive firms. They adopted empirical model grounded on the generalized version of Ohlson’s (1995) model.

The findings of the study indicate that, in intangible-intensive (non-intangible) firms, the capitalized portion of expenditure is positively (negatively) significant and the expensed portion of R&D expenditure is negatively (positively) significant to explain equity values.

The findings of this study may have potential implication for the discussion on the accounting treatment of internally generated intangible assets based on the nature of intangible intensity of the firm. The study also suggests that while setting standards, standard-setters should consider nature of intangible intensity of the firm, which could disseminate the discrepancy between the market and book value of the equity.

The study provides evidence, how value relevance of R&D reporting is affected by the nature of intangible intensity of a firm.

Corporate managers spend on research and development (R&D) for reasons of growth and survival. However, they may be less willing to invest in R&D because of its long-term horizon, high failure rate and uncertain outcomes. This study aims to explore the extent to which managerial ownership influences R&D expenditure decisions.

Apart from the linear regression models, this study uses a semi-parametric quantile regression analysis for a sample of German non-financial firms throughout 2009–2018.

This study finds a nonmonotonic sensitivity of R&D spending to the level of managerial ownership over various quantiles of R&D distribution. That is, managerial ownership increases the expenditure on R&D at low R&D intensity firms. However, it decreases the expenditure on R&D at high R&D intensity firms. These results suggest the presence of a maximum level of R&D expenditure, after which owner-managers would be unwilling to spend on R&D.

The results confirm the importance of corporate ownership structure for firm R&D and innovation activities. It provides an implication for corporate policymakers to reform the corporate ownership structures to encourage corporate managers and owners to invest in R&D projects.

This study offers two distinct contributions study. First, it provides the first German shred of evidence on the nonlinear relationship between managerial ownership and R&D expenditure decisions by distinguishing between high and low R&D intensity firms. Second, unlike prior research, it uses a semi-parametric quantile regression analysis. This method is more efficient than least-squares estimators and produces robust estimators to heteroscedasticity of the residuals.

This study aims to investigate the relationship between government subsidies, R&D expenditures and overcapacity, and to explore the heterogeneity effects in different time periods and different types of companies. It can provide theoretical and practical guidance for the development of the photovoltaic industry.

This paper constructs a mediation model to explore the impact of government subsidies on overcapacity and on R&D expenditures, and to propose an indirect way to disentangle the impact of government subsidies on the creation of overcapacity from the positive aspect of increased R&D expenditures. A total of 94 listed enterprises in the Chinese photovoltaic industry were selected as the sample over the period 2012–2019.

There was significant overcapacity in the photovoltaic industry. Government subsidies had a positive effect in promoting overcapacity and R&D expenditures. The influence of government subsidies on excess capacity increased and on R&D expenditures decreased over time. Compared with large enterprises, government subsidies the small enterprises received had a greater positive impact on the overcapacity and a smaller positive impact on R&D expenditure. R&D expenditures restrained the influence of government subsidies on overcapacity, but the suppression effect was limited and decreased over time. The indirect effect in small enterprises was greater than that of large enterprises.

This paper studied government subsidies, R&D expenditure and overcapacity in the same framework and used bias-corrected bootstrapping to explore the path of “government subsidies–R&D expenditures–overcapacity”. The heterogeneous effects in different periods and different types of firms are discussed.

The purpose of this paper is to link valuation of different accounting items to research and development (R&D) investment decisions and investigate how suboptimal R&D choices during initial public offering (IPO) are linked to future operating and market underperformance.

For firms with substantial growth opportunities, accounting net income is a poor measure of the firm’s performance (Smith and Watts, 1992). Therefore, other metrics such as R&D intensity are used by investors to evaluate firms’ performance. This leads to a coexistence of two strategies: if earnings are the main value driver, firms tend to underinvest in R&D; and if R&D expenditures are the main value driver, firms tend to overinvest in R&D.

The authors show that the R&D investment decision varies systematically with cross-sectional characteristics: firms that are at the growth stage, unprofitable or belong to science-driven industries are more likely to overinvest, while firms that are able to avoid losses by decreasing R&D expenditure are more likely to underinvest. Finally, they find that R&D overinvestment leads to future underperformance as evidenced by poor operating return on assets, lower product market share, higher frequency of delisting due to poor performance and negative abnormal stock returns.

While prior literature concentrates on R&D underinvestment as a tool of reporting higher net income, the authors demonstrate the existence of an alternative strategy used by many IPO firms – R&D overinvestment.

The purpose of this paper is to investigate how different research and development (R&D) accounting choice (capitalization and expensing) affects the value of the listed companies under the new Chinese Accounting Standards (CAS) background. According to new CAS, R&D expenditure can either be expensed as incurred as a whole or partly capitalized and partly expensed from 2007.

The paper takes the form of an empirical study using a hand-collected sample of 3,664 observations from Chinese listed companies over 2007–2012 timeframe.

It is found that different methods of reporting R&D investments do affect the value of listed firms in China. Specifically, the firms that chose to capitalize their R&D investments have higher stock price and return. On the contrary, the companies that select to expense their R&D expenditures have lower stock price and return. It is also found that capitalized R&D investments are positively connected to stock price, while expensed R&D expenditures are negatively related to stock prices.

This paper researches and finds the value relevance of R&D capitalization and expensing from the accounting report method itself. This explores some interesting research questions. Does choice of accounting method for R&D expenditure affect firm valuation? Do different methods of reporting R&D investments transfer different signal to investors? Does expensed R&D carry a negative signal to investors? So it can expand the existing R&D area of research.

This paper can provide empirical evidence and decision support for corporate managers, R&D policy makers and investors in a non-mandatory disclosure market of R&D expenditure. Because different R&D accounting choice has different market reactions, managers can choose a favorable method of reporting R&D investments to raise their firm’s stock price. Policy makers should standardize accounting treatment of R&D expenditure, strengthen the disclosure of R&D information and develop a detailed, workable R&D capitalization accounting policies and procedures. Investors can make the right judgment and decision on business innovation capability and future development only by getting more R&D investment information.

Different from present studies focusing on the value relevance of R&D investment, this paper explores an interesting topic showing how different methods of reporting R&D investment in China affect the value of the firms.

This paper aims to examine the short-term structure of the impact of R&D investments on turnover growth, indicating differences between tangible and intangible investments. The main questions are whether R&D and capital investments accompany firms' growth in the subsequent periods and how this relationship depends on other characteristics of the firms, such as size and industry. In addition, the authors study the relationship between R&D investments and the autocorrelation dynamics of firm growth.

The paper uses the European Industrial R&D Investment Scoreboard as data source. This data source includes 1,000 European companies with information on employees, turnover, sector affiliation and details on capital expenditure and R&D expenditure.

The authors find that R&D activities have, on average, a positive effect on turnover growth, while capital investments show both, positive and negative, relationships with firm growth. The relationship and its temporal structure strongly depend on firm size and industry affiliation as well as whether investments are considered as one-time or permanent activities.

Usually, the impacts of firm characteristics on firm growth are studied without explicitly considering time. Firm characteristics and firm growth are usually measured and examined at the same point in time. In contrast, the study will focus on the short-term structure of the influence of firm characteristics on turnover growth, especially the impact of R&D investments.

This study examines the differences in the economic stimulus effects, transmission mechanisms, and output multipliers of government consumption, government traditional investment, and government science and technology investment.

This study constructs and estimates a New Keynesian model of endogenous technological progress embedded in the research and development (R&D) and technology transfer sectors. Using Chinese macroeconomic time series data from 1996 to 2019, this study calibrates and estimates the model and analyzes the impulse response function and a counterfactual simulation of expenditure structure adjustment.

The results show that compared with the traditional dynamic stochastic general equilibrium (DSGE) model, the endogenous process of technological progress amplifies the impact of government consumption shock and traditional government investment shock on the macroeconomy, leading to greater economic cycle fluctuations. As government investment in science and technology has positive external spillover effects on firm R&D activities and the application of innovation achievements, it can promote more sustainable economic growth than government consumption and traditional investment in the long run.

This study constructs an extended New Keynesian model with different types of government spending, which includes endogenous technological progress within the R&D and technology transfer sectors, thereby linking fiscal policy, business cycle fluctuations and long-term economic growth. This model can study the macroeconomic impact of fiscal expenditure structure adjustment when fiscal expansion is limited. In the Bayesian estimation of model parameters, this study not only uses macroeconomic variables but also adds a sequence of private R&D investment.

The main goal of this paper is to create a methodology for estimating public research and development (R&D) expenditures on Information and Communication Technologies (ICT) in the European Union (EU). The study further applies this methodology on business expenditures on R&D (BERD) data across all sectors and estimate ICT BERD within each of them. Then the study assesses the evolution of these expenditures in the context of the Digital Agenda for Europe (DAE) and its specific target to double them by 2020.

The study assumes that the share of public ICT R&D expenditures in total public R&D expenditures is similar to the share of ICT R&D labour costs. The study bases its estimation on government budget appropriations or outlays on R&D (GBAORD).

EU public ICT R&D expenditures grew steadily over the period 2004-2010 and in 2010 reached 5.9 billion. The study also estimates that the total EU ICT BERD in 2010 amounted to 15.8 billion. Regarding the DAE target about ICT R&D expenditures, the study shows that, in both public and private, the EU drops behind.

The study estimates that substantial ICT BERD can be found also in non-ICT sectors.

The methodology allows for monitoring one of the DAE targets.

The methodology currently represents the only way for measuring public ICT R&D expenditures in the EU.

Corporate social responsibility (CSR) index represents attributes of firms that are differentiated. The purpose of this paper is to investigate the impacts of differentiated CSR, CSRS (strategic CSR activities) and CSRD (defensive CSR activities) on R&D expenditure and its effectiveness on firm values.

The sample includes 1,388 firm-year observations for 2004–2015 of listed firms on the Korean Stock Exchange (KSE) whose CSR measures, KEJI (Korea Economic Justice Institute) index are available from the Citizens' Coalition for Economic Justice (2016).

The results show that while CSRS is positively associated with R&D expenditure, CSRD is not. Further, development costs and its interaction term with CSRS positively affect firm values.

This study provides an important reason to separate the attributes of the CSR in future empirical studies. The results imply that the study of effects of CSR on sustainable growth or firm values should focus on CSRS rather than CSR activities in general in future research.