The Study on the Relationship between Probability of Capitalizing R&D Expenditure and Firm Value

• Main Authors: CHIANG, YU-MIN, 江攸敏
• Other Authors: LI, CHI-HUA
• Format: Others
• Language: zh-TW
• Published: 2018
• Online Access: http://ndltd.ncl.edu.tw/handle/9nw52q

碩士 === 輔仁大學 === 會計學系碩士班 === 106 === Research and development (R&D) investment is critical to the growth and sustainable development of enterprises and also affects a firm’s future economic performance. These indicators are important factors for investors to consider when they evaluate a company's worth. This study modified Oswald's (2008) model to estimate company’s probability of capitalizing R&D expenditure (hereafter called “PCRD”). The purpose of this study is to explore the relationship between PCRD and firm value. For the main regression, this study adopted and modified the valuation model of Sougiannis (1994) to test the relationship between PCRD and earnings. The empirical results show that there is a significant positive relationship between simulated R&D capital and corporate earnings, and that the interaction between PCRD and simulated R&D capital has a negative relationship to corporate earnings. The reason might be that the incremental R&D investment of the firms that have high PCRD has diminishing incremental benefit. In addition, this study modified the Ohlson model (1995) to test the relationship between PCRD and firm's market value. The empirical results show that there is a significant positive relationship between simulated R&D capital and stock prices, and that the interaction between PCRD and simulated R&D capital has a positive relationship to stock prices. It means that investors not only consider how much firms have spent on R&D, but also think of whether the R&D expenditures of firms could conduct truly economical benefits or not while they make investment dicisions.