26
JournaIof Eusiness Finance & Accounting h,rz .{* e t ,- -.a \ Market Underesrimadon of *re Implications of R&D Increases for Future Earnings: The US Evidence AsheAr, Musfua GrcMv]rje M. O]H\4 ,lxhd nn inq n<E lla tutur .pY9 {b..qumt .bbs mNu. c_r"-8..G,tu-*;__r --*- b"_s d,o.ko.F -h.b, sk. d ^sd.b.. .;-". L.B oqPnvR& &llllo',,-rqeul|,t6bDo Ftu6 o bu. Fh (?.nmr ino ln4g, ,0o2, rb.,nan 4 J ,0a4. ud Lev eL:1., 20os\ Th. rron. Io' rhn d Tne nd. ,l,&e. of f .Iu b.n.f \ rFD..E.\ 'lr",,nrFL ^ &.mE;dbyuF u\ GAAP rqtEmnr D hFn.e 4x RrD lcE\h.n intumd \ ci{Ar.ba.d rpomns rh. drhid. RLD rn\ E, pffp., b4.rel., dd n@" e.n R&D rt- oenr Bb3turi uqEE saruft,Fa\a\or _rld- ^is -. ihar,k.r i , an /dr (eFd od i j s ."- r@-, .s eL qr tu. J *@;, q -. ff.f".f-mtx"*_,,,*.,tupeuR*rsMs nd"",," n60eea Ls ifuj}trhq,stsdo}L&a

journal of business finance & accounting

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Page 1: journal of business finance & accounting

7/17/2019 journal of business finance & accounting

http://slidepdf.com/reader/full/journal-of-business-finance-accounting 1/26

JournaIof

Eusiness Finance

&

Accounting

h,rz

.{*

e t

,-

-.a

\

Market

Underesrimadon

of *re

Implications

of R&D

Increases

for Future

Earnings:

The

US

Evidence

AsheAr,

Musfua

GrcMv]rje

M. O]H\4

,lxhd nn

inq

n<E

lla tutur

.pY9

{b..qumt

.bbs

mNu.

c_r"-8..G,tu-*;__r --*-

b"_s

d,o.ko.F

-h.b,

sk.

d

^sd.b..

.;-".

L.B

oqPnvR& &llllo',,-rqeul|,t6bDo

Ftu6

o

bu.

Fh

(?.nmr

ino

ln4g, ,0o2,

rb.,nan

4 J ,0a4. ud

Lev

eL:1., 20os\

Th.

rron.

Io'

rhn d

Tne nd.

,l,&e.

of f

.Iu

b.n.f

\

rFD..E.\

'lr",,nrFL

^

&.mE;dbyuF

u\

GAAP

rqtEmnr

D

hFn.e

4x

RrD

lcE\h.n

intumd

6

\ ci{Ar.ba.d

rpomns

rh.

drhid. RLD

rn\ E,

o

pffp.,

b4.rel.,

dd n@" e.n

R&D

rt-

oenr

Bb3turi

uqEE

i

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-.

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i ,

an

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od

i

j

s

."-

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.s

eL

qr

tu.

J

*@;, q

-.

ff.f".f-mtx"*_,,,*.,tupeuR*rsMs

nd"",,"

n60eea Ls

ifuj}trhq,stsdo}L&a

Page 2: journal of business finance & accounting

7/17/2019 journal of business finance & accounting

http://slidepdf.com/reader/full/journal-of-business-finance-accounting 2/26

or lnc

6m

tud

inE@E

densd

trigi..

rcrlhs

a

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rhis

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Comon

b

bori p.,5p€crives

n lhe pr6.n.e

or

aF4id€3$d,n6nb. rnR&Dindc*6tud$bequ.nrr.tums.

lbc,nd.

ar.

{2004)

shd l},r 6ms wil]l x*D

infte46

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op.ndns

p.rfomuc.

dm o'n.,

6lc. rh.y ilgue

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nitoy

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nia

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nena

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6ms

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x&D

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Howsti

&cn

did.n..

d6 nor

nn

ou tn.

p6sibilty

that dre

m,rk

t is

.mcient

r rtcogni;ns

pmp.r,

6.

tuur

b.o.6B

r.oE

F.&n

i r&3.

Tb.

obs.ned dsocirlion

b.s..n

rutur.

ibnm,l Esd

hd

l&D

inq.6.5

Day

be

due

b

.roE in

$en

longlindde

abnomal rEm n6DB, aising Ircn inprc .r

.ontul

Ior n5k

la.bE

r.]*d b

l* ins.aK. Eb.ind.r 1l.

(200r)

cDnEol io

n. 36dJd

nrr

racbB,

Iraely

b.E, nd.r b t@L,

ire,

and momcnM,

Ho**r,

rh6e

fadcE rle utrrik+ b

co,r.r rd

chmg6 in

rill

sdard Iirh

d ino.e. i,

R&D

sp.nd;& This n

d i,npo6r conc.m giv.. i}I lbrlEri .r .I

(2002)

shd

ihl

R&D inccas arc

Elred b sighfid

y hignd

lrr'Bbilit

ln

tusrc ffing'

Fnincmo .,

Al Hotui

d

11.

(20or)

:nd

B..r

d

d.

(20o{)

pdide aid.Dc.

drar

rrlD inr.sm.ns

in and of

nent

qhrh

tho,id

b.

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b se ru , .ps

rila

uooEd

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b

nwr.' tud [,r uL

n, L.

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d,. .b'

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I

\rmr,

r$ar.h dBtn d6

,or

4ficidy

Irs.

R&D

i,.I.2g

dnibirinsr.rs.

psidrc

ldus

of

d.ir $;oDar

rc6m

ndud

for tuoE

yta.

ou

3d

h.c

n

6

ndr.

f"n

@

tu]I, rcos,ia

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eD bc..6.r

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fimyean widr

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sisnifiani

ind6.s

in R&D

(Ne

d.nne lh;-in

dedil

below). CoNist nr

tu.ure

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w.

tud

r.d

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M h

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ot

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or

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4ispncibs

on 6ese

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.mor

daE

vh.n

disprc?oiio.ab\

Irs.

mounts

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,hout 6m p.iaom,nc.

ud.

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.@i,6d+Mbqs6,tr.J,@r di4,.ll-fu

Page 3: journal of business finance & accounting

7/17/2019 journal of business finance & accounting

http://slidepdf.com/reader/full/journal-of-business-finance-accounting 3/26

To

doe

dn.fl]y

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pro.edure.

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R&D.nau"

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'nn

ood.l

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e

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rotdi

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on

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orx&D

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ihir

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6.

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dr.

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