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R&D productivity: an exploratory international study

Author

Listed:
  • Yuan Ding
  • Hervé Stolowy
  • 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 Stolowy & Michel Tenenhaus, 2007. "R&D productivity: an exploratory international study," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 6(1), pages 86-101, February.
    • Handle: RePEc:eme:rafpps:v:6:y:2007:i:1:p:86-101
    DOI: 10.1108/14757700710725476
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    Citations

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    Cited by:

    1. Annette Ptok & Rupinder P. Jindal & Werner J. Reinartz, 2018. "Selling, general, and administrative expense (SGA)-based metrics in marketing: conceptual and measurement challenges," Journal of the Academy of Marketing Science, Springer, vol. 46(6), pages 987-1011, November.
    2. 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.
    3. Jean-François Casta & Olivier J. Ramond & Lionel Escaffre, 2008. "Economic Properties of Recognized Intangibles under Domestic Accounting Standards: Evidence from European Capital Markets," Post-Print halshs-00681592, HAL.
    4. Nourhene BLIBECH & Sarra Berraies, 2018. "The impact of CEO' duality and board's size and independence on firms’ innovation and financial performance," E3 Journal of Business Management and Economics., E3 Journals, vol. 9(1), pages 022-029.
    5. Chong Yu & Samuel DiGangi & Angel Jannasch-Pennell, 2012. "A Time-Lag Analysis of the Relationships Among PISA Scores, Scientific Research Publication, and Economic Performance," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 107(2), pages 317-330, June.
    6. Cristina CRISTE & Ciel BOVARY (MAN) & Nicoleta-Claudia MOLDOVAN & Raluca RĂCĂTĂIAN & Oana-Ramona LOBONȚ, 2024. "Eu Capacity To Bolster And Stimulate Research And Innovation: Who Is The Leader In Development?," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 19(2), pages 60-77, August.
    7. Gong, James Jianxin & Wang, Sophia I-Ling, 2016. "Changes in the value relevance of research and development expenses after IFRS adoption," Advances in accounting, Elsevier, vol. 35(C), pages 49-61.
    8. Jean-Michael Sahut & Sandrine Boulerne, 2010. "Have Ias (International Accounting Standards)/Ifrs Improved The Information Content Of Intangibles In France ?," Post-Print hal-02104906, HAL.
    9. 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.
    10. Kamran Ahmed & John Hillier & Elisabeth Tanusasmita, 2011. "R&D profitability, intensity and market‐to‐book: evidence from Australia," Accounting Research Journal, Emerald Group Publishing Limited, vol. 24(2), pages 150-177, September.
    11. repec:asi:ajoerj:2014:p:468-487 is not listed on IDEAS
    12. Christophe Pennetier & Karan Girotra & Jürgen Mihm, 2019. "R&D Spending: Dynamic or Persistent?," Manufacturing & Service Operations Management, INFORMS, vol. 21(3), pages 636-657, July.
    13. Guy D. Fernando & Qiao Xu, 2012. "CEO compensation and strategic expenses: penalizing, shielding or rewarding?," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 11(3), pages 279-297, August.
    14. repec:dau:papers:123456789/2641 is not listed on IDEAS
    15. Peng Zou & Qi Wang & Jinhong Xie & Chenxi Zhou, 2020. "Does doing good lead to doing better in emerging markets? Stock market responses to the SRI index announcements in Brazil, China, and South Africa," Journal of the Academy of Marketing Science, Springer, vol. 48(5), pages 966-986, September.

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