Economics at your fingertips  

The valuation implications of strategy in R&D-intensive industries

Apostolos Ballas and Efthimios Demirakos

Journal of Applied Accounting Research, 2018, vol. 19, issue 3, 365-382

Abstract: Purpose - The purpose of this paper is to investigate the valuation impact of firm’s strategic choices in a setting of intangibles-rich industries. Design/methodology/approach - The authors adopt the conceptual framework of Miles and Snow (1978, 2003), which identifies three viable types of firms based on their organizational strategy profiles: defenders, prospectors and analyzers. The authors use a replicable strategy score, whose scoring convention is based on rolling ratings of six ratios for the previous four years (Bentley Findings - The authors offer empirical evidence that supports the hypothesis that prospector strategies are positively associated with firm value in the industries of electronics and electrical equipment, pharmaceuticals and biotechnology and technology hardware and equipment. The authors do not find evidence to support such a relationship in the software and computer services sector. Research limitations/implications - The results of this study have significant implications for researchers, who adopt a market-based accounting research framework to examine the characteristics, performance and valuation of firms with different strategic orientation. Practical implications - The findings of this paper are useful to managers, who would like to pursue a value-adding strategy in dynamic industrial environments that are characterized by high levels of innovation, risk and growth. Originality/value - Although previous studies have yielded mixed results with respect to the association between firm’s performance and prospector strategy, the authors identify a set of R&D-intensive industries, where the implementation of the prospector strategy adds significant value to the shareholders’ wealth.

Keywords: Intangibles; Business strategy; Research and development; Value relevance; Defenders; Prospectors (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link) ... RePEc&WT.mc_id=RePEc (text/html)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
http://emeraldgroupp ... journals.htm?id=jaar

Access Statistics for this article

Journal of Applied Accounting Research is currently edited by Julia Mundy

More articles in Journal of Applied Accounting Research from Emerald Group Publishing
Bibliographic data for series maintained by Virginia Chapman ().

Page updated 2019-03-02
Handle: RePEc:eme:jaarpp:jaar-11-2015-0096