The relation between R&D intensity and future market returns: does expensing versus capitalization matter?
The Australian accounting environment provides an ideal setting for examining the impact of different accounting treatments of firms' R&D activities on their subsequent returns. Unlike US firms, which can only expense R&D, Australian GAAP permits firms to either expense or capitalize th...
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| Veröffentlicht in: | Review of quantitative finance and accounting 2007-07, Vol.29 (1), p.25-51 |
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| creator | Chan, Howard W. H. Faff, Robert W. Gharghori, Philip Ho, Yew Kee |
| description | The Australian accounting environment provides an ideal setting for examining the impact of different accounting treatments of firms' R&D activities on their subsequent returns. Unlike US firms, which can only expense R&D, Australian GAAP permits firms to either expense or capitalize their R&D expenditure. We examine separately the market impact of the R&D intensity of all R&D active firms, "capitalizers" and "expensers". Our results suggest that firms with higher R&D intensity perform better, regardless of the accounting method used, consistent with the resource-based view of the firm. We also find some evidence that firms which expense R&D outperform those which capitalize R&D after controlling for R&D intensity. [PUBLICATION ABSTRACT] |
| doi_str_mv | 10.1007/s11156-007-0023-1 |
| format | Article |
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| subjects | Accounting Accounting procedures Accounting research Accounting standards Australia Business accounting Expenditures Financial accounting Financial reporting GAAP Generalized method of moments R&D Research & development Research and development Studies |
| title | The relation between R&D intensity and future market returns: does expensing versus capitalization matter? |
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