The association of R&D and capital expenditures with subsequent earnings variability

Journal of Business Finance and Accounting

Volumn 34, Issue 1-2, 2007, Pages 222-246

  Amir, Eli ^a   Guan, Yanling ^a   Livne, Gilad ^b  

^a LONDON BUSINESS SCHOOL   (United Kingdom)

^b CITY UNIVERSITY   (United Kingdom)

Author keywords

Capital expenditures (CAPEX); Earnings variability; Industry analysis; Research and development (R D); SFAS 2

Indexed keywords

EID: 33847364438     PISSN: 0306686X     EISSN: 14685957     Source Type: Journal    
DOI: 10.1111/j.1468-5957.2006.00651.x     Document Type: Article

References (15)

1. Aboody, D. and B. Lev (1998), 'The Value Relevance of Intangibles: The Case of Software Capitalization,' Journal of Accounting Research, Vol. 36 (Supplement), pp. 161-91.
2. Chan, S., J. Martin and J. Kensinger (1990), 'Corporate Research and Development Expenditures and Share Value,' Journal of Financial Economics, Vol. 26, pp. 255-76.
3. Christensen, C. M. (1997), 'The Innovator's Dilemma' (HBS Press, Boston, Massachusetts).
4. Dukes, R. E., T. R. Dyckman and J. A. Elliott (1980), 'Accounting for Research and Development Costs: The Impact on Research and Development Expenditures,' Journal of Accounting Research, Vol. 18 (Supplement), pp. 1-26.
5. Fama, E. and K. French (1992), 'The Cross-section of Expected Returns,' Journal of Finance, Vol. 47, pp. 427-65.
6. Fama E. and K. French (1993), 'Common Risk Factors in the Returns of Stocks and Bonds,' Journal of Financial Economics, Vol. 33, pp. 3-56.
7. - and J. Macbeth (1973), 'Risk, Return, and Equilibrium: Empirical Tests,' Journal of Political Economy, Vol. 81, pp. 607-36.
8. Hirschey, M. and J. Weygandt (1985), 'Amortization Policy for Advertising and Research and Development Expenditures,' Journal of Accounting Research, Vol. 23, pp. 326-85.
9. Jorgenson, D. W. (2001), 'Information Technology and the U.S. Economy,' The American Economic Review, Vol. 91, No. 1, pp. 1-32.
10. Kerstein, J. and S. Kim (1995), 'The Incremental Information Content of Capital Expenditures,' The Accounting Review, Vol. 70, No. 3, pp. 513-26.
11. Kothari, S. P., T. E. Laguerre and A. J. Leone (2002), 'Capitalization versus Expensing: Evidence on the Uncertainty of Future Earnings From Capital Expenditures versus R&D Outlays,' Review of Accounting Studies, Vol. 7, No. 4, pp. 355-82.
12. Lev, B. and T. Sougiannis (1996), 'The Capitalization, Amortization, and Value-relevance of R&D,' Journal of Accounting Economics, Vol. 21, pp. 107-38.
13. Newey, W. K. and K. D. West (1987), 'A Simple, Positive Semi-definite Heteroscedasticity and Autocorrelation Consistent Covariance Matrix,' Econometrica, Vol. 55, pp. 703-8.
14. Petersen, M. A. (2005), 'Estimating Standard Errors in Finance Panel Datasets: Comparing Approaches,' NBER Working Paper W11280 (Kellogg School, Northwestern University).
15. Sougiannis, T. (1994), 'The Accounting Based Valuation of Corporate R&D,' The Accounting Review, Vol. 69, pp. 44-68.