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R&D expenditures and earnings targets

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R&D expenditures and earnings targets. / Young, S E; Garcia, B.

In: European Accounting Review, Vol. 18, No. 1, 2009, p. 7-32.

Research output: Contribution to journalJournal articlepeer-review

Harvard

Young, SE & Garcia, B 2009, 'R&D expenditures and earnings targets', European Accounting Review, vol. 18, no. 1, pp. 7-32. https://doi.org/10.1080/09638180802016718

APA

Young, S. E., & Garcia, B. (2009). R&D expenditures and earnings targets. European Accounting Review, 18(1), 7-32. https://doi.org/10.1080/09638180802016718

Vancouver

Young SE, Garcia B. R&D expenditures and earnings targets. European Accounting Review. 2009;18(1):7-32. https://doi.org/10.1080/09638180802016718

Author

Young, S E ; Garcia, B. / R&D expenditures and earnings targets. In: European Accounting Review. 2009 ; Vol. 18, No. 1. pp. 7-32.

Bibtex

@article{056af37654d24b729a70ac0036b7a001,
title = "R&D expenditures and earnings targets",
abstract = "This paper examines whether firms cut R&D spending in response to short-term earnings pressures and how equity markets interpret such behaviour. Failure to report positive earnings and earnings growth increases the probability of a subsequent cut in R&D spending, while pressure to report positive earnings and earnings growth in the current period leads to contemporaneous cuts in R&D investment. On average, investors place less weight on earnings increases accompanied by unexpected cuts in R&D spending. However, the magnitude of the valuation discount varies according to the perceived reason for the cut and the importance of R&D investment as a driver of firm value. ",
author = "Young, {S E} and B Garcia",
year = "2009",
doi = "10.1080/09638180802016718",
language = "English",
volume = "18",
pages = "7--32",
journal = "European Accounting Review",
issn = "0963-8180",
publisher = "Routledge",
number = "1",

}

RIS

TY - JOUR

T1 - R&D expenditures and earnings targets

AU - Young, S E

AU - Garcia, B

PY - 2009

Y1 - 2009

N2 - This paper examines whether firms cut R&D spending in response to short-term earnings pressures and how equity markets interpret such behaviour. Failure to report positive earnings and earnings growth increases the probability of a subsequent cut in R&D spending, while pressure to report positive earnings and earnings growth in the current period leads to contemporaneous cuts in R&D investment. On average, investors place less weight on earnings increases accompanied by unexpected cuts in R&D spending. However, the magnitude of the valuation discount varies according to the perceived reason for the cut and the importance of R&D investment as a driver of firm value.

AB - This paper examines whether firms cut R&D spending in response to short-term earnings pressures and how equity markets interpret such behaviour. Failure to report positive earnings and earnings growth increases the probability of a subsequent cut in R&D spending, while pressure to report positive earnings and earnings growth in the current period leads to contemporaneous cuts in R&D investment. On average, investors place less weight on earnings increases accompanied by unexpected cuts in R&D spending. However, the magnitude of the valuation discount varies according to the perceived reason for the cut and the importance of R&D investment as a driver of firm value.

U2 - 10.1080/09638180802016718

DO - 10.1080/09638180802016718

M3 - Journal article

VL - 18

SP - 7

EP - 32

JO - European Accounting Review

JF - European Accounting Review

SN - 0963-8180

IS - 1

ER -