An experimental examination of the effects of SFAS No. 2 on R&D investment decisions

The effects of capitalizing or expensing R&D expenditures on decentralized managers' investment decisions were tested in a multiperiod laboratory experiment. Subjects chose from menus of R&D and property, plant and equipment (PPE) projects. Suboptimizing behavior (inferior PPE projects...

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Veröffentlicht in:	Accounting, organizations and society organizations and society, 1991, Vol.16 (3), p.227-242
Hauptverfasser:	Cooper, Jean C., Selto, Frank H.
Format:	Artikel
Sprache:	eng
Schlagworte:	Decision making Financial accounting standards Hypotheses Investments Mathematical models R&D Research & development Research & development expenditures Standard deviation Variables
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Beschreibung
Zusammenfassung:	The effects of capitalizing or expensing R&D expenditures on decentralized managers' investment decisions were tested in a multiperiod laboratory experiment. Subjects chose from menus of R&D and property, plant and equipment (PPE) projects. Suboptimizing behavior (inferior PPE projects selected over superior R&D projects) was greater for R&D expensers. They chose relatively fewer R&D projects, spent less on R&D and generated lower terminal present values. When the accounting method for R&D changed, shifts in behavior consistent with the new method were observed.
ISSN:	0361-3682 1873-6289
DOI:	10.1016/0361-3682(91)90002-V