The valuation of R&D expenditures in Japan

Pascal Nguyen, Sophie Nivoix and Mikiharu Noma

Accounting and Finance, 2010, vol. 50, issue 4, 899-920

Abstract: The difficulty to measure the long‐term benefits of R&D expenditures and the distortions induced by R&D accounting suggest that R&D‐intensive firms could be undervalued. Using several methods commonly applied to detect the abnormal returns associated with mispricing, we find little evidence that the value of R&D investments has been underestimated in the Japanese stock market. Given that R&D accounting rules in Japan are similar to those in United States, the results appear to reject the hypothesis that accounting biases are the cause of the undervaluation of R&D investments observed in the United States.

Date: 2010
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https://doi.org/10.1111/j.1467-629X.2010.00345.x

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