A model of R&D capitalization
AbstractThis paper studies the decision of firms to expense or capitalize R&D expenditures. The firm has an incentive to mismatch the benefits and costs of R&D, expensing a larger portion of R&D when the benefits occur in the long-run and capitalizing a larger portion when the benefits occur in the short-run. There is strategic substitutability between R&D investments and expensing. Accounting standards, market evaluation of capitalization, and firms’ accounting policies can have real effects on innovation.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 39459.
Date of creation: 18 Jan 2004
Date of revision:
Publication status: Published in International Journal of Business and Economics No. 2.Vol. 4(2005): pp. 107-121
Innovation; Expensing; Capitalization; Accounting standards;
Other versions of this item:
- Gamal Atallah & Massoud Khazabi, 2005. "A Model of R&D Capitalization," International Journal of Business and Economics, College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan, College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 4(2), pages 107-121, August.
- Gamal Atallah, 2005. "A Model of R&D Capitalization," Working Papers, University of Ottawa, Department of Economics 0501E, University of Ottawa, Department of Economics.
- M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
- L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
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