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|Title:||The relation between R&D intensity and future market returns: Does expensing versus capitalization matter?|
|Keywords:||Accounting for R&D|
Capitalization of R&D
|Citation:||Chan, H.W.H.,Faff, R.W.,Gharghori, P.,Ho, Y.K. (2007). The relation between R&D intensity and future market returns: Does expensing versus capitalization matter?. Review of Quantitative Finance and Accounting 29 (1) : 25-51. ScholarBank@NUS Repository. https://doi.org/10.1007/s11156-007-0023-1|
|Abstract:||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. © 2007 Springer Science+Business Media, LLC.|
|Source Title:||Review of Quantitative Finance and Accounting|
|Appears in Collections:||Staff Publications|
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