R & D accounting and the tradeoff between relevance and objectivity

Journal of Accounting Research

Volumn 40, Issue 3, 2002, Pages 677-710

  Healy, Paul M ^a   Myers, Stewart C ^b   Howe, Christopher D ^b  

^a HARVARD BUSINESS SCHOOL   (United States)

^b MASSACHUSETTS INSTITUTE OF TECHNOLOGY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0036017573     PISSN: 00218456     EISSN: None     Source Type: Journal    
DOI: 10.1111/1475-679X.00067     Document Type: Article

References (33)

1. ABEL, R. "A Comparative Simulation of German and U.S. Accounting Principles." Journal of Accounting Research 7 (1969): 1-11.
2. BABER, W. H., AND S.-H. KANG. "Accounting-Based Measures as Estimates of Economic Rates of Return." Paper prepared for the Office of Technology Assessment, U.S. Congress, 1991.
3. BEAVER, W. H., AND J. DEMSKI. "The Nature of Income Measurement." The Accounting Review 64 (1979): 38-46.
4. BUBLITZ, B., AND M. ETTREDGE. "The Information in Discretionary Outlays: Advertising, Research and Development." The Accounting Review 64 (1989): 108-24.
5. BURGSTAHLER, D., AND I. DICHEV. "Earnings Management to Avoid Earnings Decreases and Losses." Journal of Accounting and Economics 24 (1997): 99-127.
6. CHAN, S.; J. MARTIN; AND J. KESINGER. "Corporate Research and Development Expenditures and Share Value." Journal of Financial Economics 26 (1990): 255-76.
7. CHANG, J. "The Decline in Value Relevance of Earnings and Book Values." Unpublished working paper, Boston, MA: Harvard Business School, 1998.
8. DECHOW, P. M.; R. G. SLOAN; AND A. P. SWEENEY. "Causes and Consequences of Earnings Manipulation: An Analysis of Firms Subject to Enforcement Actions by the SEC." Contemporary Accounting Review 13 (1996): 1-36.
9. DIMASI, J. A. "Success Rates for New Drugs Entering Clinical Testing in the United States." Clinical Pharmacology & Therapeutics 58 (1995a): 1-14.
10. _. "Research and Development Costs for New Drugs by Therapeutic Category." PharmacoEconomics 7 (1995b): 152-69.
11. DUKES, R. "An Investigation of the Effects of Expensing Research and Development Costs on Security Prices." In: Proceedings of the Conference on Topical Research in Accounting, New York, NY: New York University, 1976.
12. EASTON, P., AND T. HARRIS. "Earnings as an Explanatory Variable for Returns." Journal of Accounting Research (Spring 1991): 19-36.
13. ECCHER, E. "The Value Relevance of Capitalized Software Development Costs." Unpublished working paper, Cambridge, MA: MIT Sloan School of Management, 1997.
14. ELLIOTT J.; G. RICHARDSON; T. DYCKMAN; AND R. DUKES. "The Impact of SFAS No. 2 on Firm Expenditures on Research and Development: Replications and Extensions." Journal of Accounting 22 (1984): 85-102.
15. FISHER, F. M., AND J. I. McGOWAN. "On the Misuse of Accounting Rates of Return to Infer Monopoly Profits." American Economic Review 73 (1983): 82-97.
16. FRANKFURTER, G., AND B. HORWITZ. "The Effects of APB Opinion No. 15 on EPS: a Simulation Study." The Accounting Review 47 (1972): 245-59.
17. GONEDES, N. J., AND N. DOPUCH. "Capital Market Equilibrium, Information Production, and Selecting Accounting Techniques: Theoretical Framework and Empirical Work." Journal of Accounting Research 12 (1974): 48-129.
18. GRABOWSKI, H. G., AND J. M. VERNON. "A New Look at the Returns and Risks to Pharmaceutical R&D." Management Science 36 (1990): 804-21.
19. _ AND _. "Returns to R&D on New Drug Introductions in the 1980s." Journal of Health Economics 13 (1994): 384-406.
20. GREENBALL, M. N. "The Accuracy of Different Methods of Accounting for Earnings-A Simulation Approach." Journal of Accounting Research 6 (1968): 114-29.
21. HENDERSON, R., AND I. COCKBURN. "Scale, Scope and Spillovers: The Determinants of Research Productivity, in Drug Discovery." RAND Journal of Economics 27 (1996): 32-59.
22. HIRSCHEY, M., AND J. WEYGANDT. "Amortization Policy for Advertising and Research and Development Expenditures." Journal of Accounting Research 23 (1985): 326-35.
23. HOWE, C. D. "Financial Model for the Drug Development Process." Unpublished M.S. thesis, Cambridge, MA: MIT, 1995.
24. KOTHARI, S. P.; T. LAGUERRE; AND A. LEONE. "Capitalization versus Expensing: Evidence on the Uncertainty of Future Earnings from Current Investments in PP&E versus R&D." Unpublished working paper, Cambridge, MA: MIT Sloan School of Management, 1998.
25. LEV, B., AND P. ZAROWIN. "The Boundaries of Financial Reporting and How to Extend Them." Unpublished working paper, New York, NY: New York University, 1998.
26. _ AND T. SOUGIANNIS. "The Capitalization, Amortization, and Value-Relevance of R&D." Journal of Accounting and Economics 21 (1996): 107-38
27. MYERS, S. C., AND C. HOWE. "A Life-Cycle Financial Model of Pharmaceutical R&D." Unpublished working paper, Cambridge, MA: MIT Sloan School of Management, 1997.
28. _ AND L. SHYAM-SUNDER. "Cost of Capital Estimates for Pharmaceutical Research and Development." In Competitive Strategies in the Pharmaceutical Industry, edited by R. B. Helms. Washington, DC.: American Enterprise Institute, 1996.
29. SCHERER, F. M. "Pricing, Profits, and Technological Progress in the Pharmaceutical Industry." Journal of Economic Perspectives 7 (1993): 97-115.
30. SOLOMON, E., AND J. LAYA. "Measurement of Company Profitability: Some Systematic Errors in the Accounting Rate of Return." In Financial Research and Management Decisions, edited by A. A. Robichek. New York: John Wiley & Sons, Inc., 1967, pp. 152-83.
31. U.S. CONGRESS, OFFICE OF TECHNOLOGY ASSESSMENT. Pharmaceutical R&D: Costs, Risks and Rewards, Washington, DC.: U.S. Government Printing Office, 1993.
32. WASLEY, C., AND T. LINSMEIER. "A Further Examination of the Economic Consequences of SFAS No. 2." Journal of Accounting Research 30 (1992): 156-64.
33. WATTS, R. L., AND J. L. ZIMMERMAN. "Positive Accounting Theory: A Ten Year Perspective." The Accounting Review 65 (1990): 131-56.