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This study aims to investigate how the intangible intensive nature of firms affects the value relevance of earnings and the book value of equity between profit- and loss-reporting firms. The study also examines how firms’ intangible intensity affects the value relevance of R&D outlays between profit- and loss-reporting firms.

An empirical analysis based on Ohlson’s (1995) framework is used. A total of 54,421 firm-year observations of Indian listed firms from financial years 1992–2016 constitute the study sample.

The findings suggest that the difference in the value relevance of earnings and the book value of equity between profit- and loss-reporting firms is more significant in non-intangible intensive firms than in intangible firms. Specifically, earnings are more value relevant in profit-reporting and non-intangible intensive firms, whereas book value of equity is more value relevant in loss-reporting and intangible intensive firms. The results also suggest that the difference in the incremental value relevance of R&D information between profit- and loss-making firms is higher in intangible intensive firms than in non-intangible intensive firms.

The findings of this study can help managers, standard-setters and investors make effective decisions.

This study offers insights into the impact of intangible intensity on the value relevance of aggregated and disaggregated accounting information between profit- and loss-making firms in institutional settings where capitalization of R&D expenditures is allowed.

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.

The purpose of this paper is to investigate whether R&D spending influences the association between the cash compensation of boards of directors and relative performance evaluation (hereafter RPE). Design/methodology/approach

The empirical modelling of directors' compensation focuses on the multiperiod compensation approach suggested by Lambert, Lambert and Larcker and Janairaman, Lambert, and Larcker. A panel sample of 586 UK non‐financial public listed firms for the period 1990 to 1998 is employed to test for the existence of RPE in both R&D intensive and non/low R&D firms.

The main results suggest that implicit RPE is used to determine directors' cash compensation before the institutional influences and self‐regulation are likely to have taken effect. We find that the association between the cash compensation of directors and accounting measures of relative performance is lower in R&D intensive firms compared to firms with non/low R&D. It is possible that R&D intensive firms do not use accounting‐related RPE at all. In comparison, a statistically significant relationship indicates that non/low R&D firms do use accounting‐based RPE. The results also show that, in both intensive and non/low R&D firms, cash compensation is negatively related to own firm stock returns and industry average stock returns.

This paper contributes to the limited RPE found in the existing UK compensation literature by establishing the implicit use of accounting‐based RPE for non/low R&D firms in the UK.

This paper investigates the extent to which formal capital budgeting methods are used in small high-tech firms. We define high-tech firms by their R&D intensity. In addition, we define software industry as a special type of R&D-intensive firm. We focus on the methods that are used by the small high-tech firms in evaluating the profitability of investment projects, estimating the cost of capital and making decisions related to the capital structure. Our results based on two surveys of Finnish firms indicate that the high-tech firms use similar capital budgeting methods and estimate their cost of capital in a similar way to other small-sized firms in other industries. Moreover, high-tech firms seek external financing and co-owners.

Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.

The purpose of this research is to look at the effects of research and development expenditures (R&D) on value and risks of publicly traded companies by studying returns on stock exchanges of R&D-intensive economies (Republic of Korea, Finland and Israel).

Empirical tests of multifactor asset pricing models were applied to demonstrate that R&D intensity could be considered as a pricing factor and affect investors’ risk premiums on those markets. To discover the reasons behind the asset pricing R&D anomaly, this study investigated the nature of R&D risk further by looking into the interactions of R&D and currency risks.

This study discovered that investors in stock markets of R&D-intensive countries should require a positive equity risk premium. However, the reduction of R&D intensity may increase firms’ risks and firms with higher R&D-intensity are less exposed to currency risks in R&D-intensive economies.

Many researchers have investigated the relationship between a firm’s R&D and stock returns. But nearly all of them focus on the US Stock Market and attempt to determine the reasons for R&D’s impact on firms’ risks and market value. Meanwhile, the role of R&D and related risks for investors could be even more prominent for stock markets in R&D-intensive countries. To bridge this gap, this research studied stock returns on exchanges of three developed countries where the ratio of gross domestic expenditure on R&D (GERD) to GDP is among the highest worldwide. In this study, the methodology of asset pricing empirical studies was adopted and it was further developed to analyze the causes of R&D risks. The new methodology was applied to discover relationship between R&D intensity and currency risk exposure. The interesting findings could be used for development of firms’ corporate strategies in those countries and for elaboration of policy decisions.

The chapter is structured as follows: in the first part, we provide the framework for the analysis of the formation of the born global firm, whereas the entrepreneurial, strategic, and network-based factors are conceptually linked and leading toward a global champion. The analytical model proposes the analysis of strategic choices as defining factors at the level of entrepreneurial behavior, firm strategy, and network. The case study methodology is provided in the second part of the chapter. The third part provides the empirical linkages of entrepreneurial, strategy based, and network factors’ manifestations and underpinnings in R&D intensive entrepreneurial born global firms. These are followed by discussion and conclusions enclosing empirically grounded framework that explains the emergence of R&D intensive entrepreneurial-hidden champions from the perspective of entrepreneurial firm and network theories.

The purpose of this paper is to provide a comprehensive review of the literature on R&D expenses and subsequent firm valuation and to briefly highlight some gaps and implications for future research.

The approach is a review of studies on R&D and valuation between 1978 and 2007. The valuation issues have been grouped into general topics identified among the overall volume of research: economic characteristics, actual and forecast firm performance, capital structure, risk, and other topics which do not fit into the previous categories.

The paper provides a comprehensive assessment of the literature findings on a variation of valuation topics useful for internal and external users of financial statements of firms intensive in R&D investments. It sheds light on certain literature limitations and thus guides the users of financial statements regarding to which issues they should pay attention when analysing the financial statements of firms intensive in R&D.

Existing research on R&D and valuation focuses mainly on the USA and UK and therefore raises issues of generalisation of the results.

The paper provides a useful guide for the users of financial statements of R&D intensive firms, since it provides information on possible consequences of these expenses regarding a variety of valuation issues.

The paper fills an information gap by addressing a range of valuation issues on R&D and offers relevant information guidance to the users of financial statements.

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.

The empirical support for agency theory explanations for the great variance in CEO pay has been equivocal. Drawing from the performance appraisal literature, we hypothesize that boards of directors incorporate human judgment into the evaluation and reward of CEO performance in order to balance managerial risk with agency costs. We test Baysinger and Hoskisson’s (1990) proposition that insider‐dominated corporate boards rely on subjective performance evaluation to reward the CEO, and we argue that R&D intensity influences this relationship. Using a sample of Fortune firms, findings support our contention that human judgment is important in evaluating and rewarding CEO performance.