The changing implications of research and development expenditures for future profitability

• 成果类型: Article
• 署名作者: Curtis, Asher; McVay, Sarah; Toynbee, Sara
• 署名单位: University of Washington; University of Washington Seattle; University of Texas System; University of Texas Austin
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-019-09528-6
• 发表日期: 2020
• 页码: 405-437
• 关键词: VALUE-RELEVANCE; earnings; QUALITY; CLASSIFICATION; PRODUCTIVITY; management; dependence; INNOVATION; expenses; returns

摘要

We document strong evidence of a declining relation between R&D and future profitability, which coincides with a number of important economic changes, including a significant increase in R&D spending. We identify several contributors to this decline, including changes in the nature and riskiness of R&D projects and a shift in the types of firms undertaking R&D in our sample. We also demonstrate variation in the implications of R&D for future profitability, consistent with diminishing marginal returns to R&D investments. Overall, our evidence suggests that, in earlier periods, investments in R&D offered high returns in U.S. public firms but that in more recent times these returns have stabilized at lower levels. Our study offers important insights for financial statement users, managers, and researchers.