The Impact of the Disclosed R & D Expenditure on the Value Relevance of the Accounting Information: Evidence from Greek Listed Firms

Petros Kalantonis, Sotiria Schoina, Spyros Missiakoulis and Constantin Zopounidis
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Petros Kalantonis: Department of Tourism Administration, School of Administrative, Economics and Social Sciences, University of West Attica, 12243 Egaleo, Greece
Sotiria Schoina: Department of Tourism Administration, School of Administrative, Economics and Social Sciences, University of West Attica, 12243 Egaleo, Greece
Spyros Missiakoulis: Department of Economics, School of Economics and Political Sciences, National & Kapodistrian University of Athens, 10559 Athens, Greece
Constantin Zopounidis: Financial Engineering Laboratory, School of Production Engineering and Management, Technical University of Crete, 73100 Chania, Greece

Mathematics, 2020, vol. 8, issue 5, 1-18

Abstract: Although many empirical studies have focused on R & D performance models for markets globally, the available financial information for R & D expenditure is limited. In other words, can we assume that the reported accounting information for R & D investment is adequate and valuable? This study empirically investigates the effect of R & D reported information on the value relevance of the accounting information of firms’ financial statements. Specifically, using Ohlson’s equation, it is examined whether changes in stock prices are explained better when R & D factors are included in models, in conjunction with changes in book value and abnormal earnings. We focus on listed firms on the Athens Stock Exchange in order to explore whether R & D expenses are value relevant, in a market which has been affected for a long period by the global economic crisis of 2007. In our findings, we observe that the reported R & D expenses do not have any significant influence on the investors’ choices, in contrast to expectations based on the prior literature. Moreover, the panel data analysis employed in the paper overcomes common methodological problems (such as autocorrelation, multicollinearity, and heteroscedasticity) and allows the estimation of unbiased and efficient estimators.

Keywords: value relevance; book value; abnormal earnings; R & D; panel data (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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