Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
9726018 | International Review of Financial Analysis | 2005 | 22 Pages |
Abstract
The literature on the valuation relevance of R&D investments is based primarily on cross-sectional regressions or panel data regressions with time and firm (or industry) fixed effects such that the parameters relating R&D to market value are cross-sectionally constant. In an alternative approach, this paper investigates the value relevance of R&D investment using an earnings-based time series valuation model. Model parameters are estimated for each firm separately. In contradistinction to the results obtained from cross-sectional and fixed effects panel models, this study finds weak empirical support at best for the value relevance of R&D expenditures at the firm level.
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Authors
Jeffrey L. Callen, Mindy Morel,