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R&D productivity: an exploratory international study

Author

Listed:
  • Yuan Ding
  • Hervé Michel Tenenhaus

Abstract

Purpose - The objective of this exploratory paper is to investigate the impact of R&D expenditures on company performance. R&D activities play an essential role in the future economic development and financial performance of firms. Design/methodology/approach - The research design is based on an earnings equation associating earnings with recorded assets, R&D expenditures and selling, general and administrative expenses (proxying for advertising expenses). The paper determines a rate of return on R&D for each given sample of firms in six developed countries. Findings - The results corroborate previous studies of American companies, which found that reported earnings, adjusted for expensing of R&D, reflect realized benefits from R&D. This study provides further evidence on the positive contribution of R&D activities to future company performance, although this contribution can vary from one country to another. Research limitations/implications - Being exploratory in nature, this paper suggests several areas for investigation. Originality/value - With the exception of some American studies, the economic effectiveness of investment in R&D is seldom demonstrated explicitly by the literature, and to the best of our knowledge, there are no existing studies on R&D productivity taking an international approach.

Suggested Citation

  • Yuan Ding & Hervé Michel Tenenhaus, 2007. "R&D productivity: an exploratory international study," Review of Accounting and Finance, Emerald Group Publishing, vol. 6(1), pages 86-101, February.
  • Handle: RePEc:eme:rafpps:v:6:y:2007:i:1:p:86-101
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    Citations

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    Cited by:

    1. Efstathios G. Parcharidis & Nikos C. Varsakelis, 2010. "R&D and Tobin's q in an emerging financial market: the case of the Athens Stock Exchange," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 31(5), pages 353-361.
    2. Jean-François Casta & Olivier Ramond & Lionel Escaffre, 2008. "Economic Properties of Recognized Intangibles under Domestic Accounting Standards: Evidence from European Capital Markets," Post-Print halshs-00681592, HAL.
    3. repec:etr:series:v:9:y:2018:i:1:p:022-029 is not listed on IDEAS
    4. repec:eee:advacc:v:35:y:2016:i:c:p:49-61 is not listed on IDEAS
    5. Alexander Tsyplakov, 2011. "An introduction to state space modeling (in Russian)," Quantile, Quantile, issue 9, pages 1-24, July.
    6. Orbach Yair & Fruchter Gila E., 2010. "A Utility-Based Diffusion Model Applied to the Digital Camera Case," Review of Marketing Science, De Gruyter, vol. 8(1), pages 1-28, June.
    7. Kamran Ahmed & John Hillier & Elisabeth Tanusasmita, 2011. "R&D profitability, intensity and market-to-book: evidence from Australia," Accounting Research Journal, Emerald Group Publishing, vol. 24(2), pages 150-177, September.
    8. repec:asi:ajoerj:2014:p:468-487 is not listed on IDEAS
    9. Guy D. Fernando & Qiao Xu, 2012. "CEO compensation and strategic expenses: penalizing, shielding or rewarding?," Review of Accounting and Finance, Emerald Group Publishing, vol. 11(3), pages 279-297, August.
    10. repec:dau:papers:123456789/2641 is not listed on IDEAS

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