Accounting choice and future performance: The case of R&amp;D accounting in France

Cazavan-Jeny, Anne; Jeanjean, Thomas; Joos, Peter R.

doi:10.1016/j.jaccpubpol.2010.09.016

Cited by 96 publications

(94 citation statements)

References 35 publications

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“…The empirical results highlighted the positive role of R&D investment in the improvement of operational cash flows and gross profit margins. So, the study main hypothesis (H1) was mainly confirmed and this result was also consistent with the outcomes obtained from previous literature (Wang et al, 2016;Cazavan-Jeny et al, 2011;Ehie and Olibe, 2010;Anagnostopoulou and Levis, 2008). In addition, the performance influence of R&D intensity was positive for all SMEs independently of the industry in which they operated.…”

Section: Resultssupporting

confidence: 90%

“…In general, firms that invest heavily in R&D investments are more likely to be profitable and successful. There is strong empirical evidence from the US (Ciftsi and Cready, 2011;Sougiannis, 1994), UK (Anagnostopoulou and Levis, 2008) and EU markets (Cazavan-Jeny et al, 2011) that R&D intensity is positively related to the future level of operating performance. Also, these studies take into account possible interactions of R&D with firm size, technological intensity level of the industry and the life cycle of firm.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

“…The specific activity may influence their value and performance since it provides a firm with specific know-how which may strengthen its efficiency (Oliveira et al, 2010;Lev, 2001). Financialaccounting research primarily strives to answer whether R&D investment improves future firm performance (Wang et al, 2016;Cazavan-Jeny et al, 2011;Ciftsi and manufacturing small-and Medium-sized Enterprises (SMEs) in Greece and sheds light in some interesting new insights of operational performance since the Greek financial system is "bank-driven" and almost all SMEs are not listed companies. In bank-based financial systems, the relationship between R&D investment and the level of future profitability may increase (Karjalainen, 2008).…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

RD activity and operating performance of small and medium-sized enterprises (SMEs): The case of a small open economy

Aggelopoulos¹,

Eriotis²,

Γεωργόπουλος³

et al. 2016

J. Account. Taxation

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The study investigates the impact of R&D activity on operational performance of small-and Mediumsized Enterprises (SMEs). Prior studies have indicated that R&D activity improves market performance of large listed companies in advanced economies. We extend the research objective on the operational performance of SMEs in the small open Greek economy in which SMEs are normally not listed companies operating in a "bank-driven" financial system. The empirical results highlight the positive role of R&D investment in the performance improvement of SMEs, especially in the increase of operating cash flows and gross profit margins. Furthermore, the results indicate that the performance impact of R&D activity is moderated by the life cycle and firm size, but it does not depend on the technological intensity of the industry. Overall, the findings suggest that R&D activity may be a positive factor in the enhancement of operational performance of SMEs.

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Section: Resultssupporting

confidence: 90%

Section: Hypotheses Developmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

RD activity and operating performance of small and medium-sized enterprises (SMEs): The case of a small open economy

Aggelopoulos¹,

Eriotis²,

Γεωργόπουλος³

et al. 2016

J. Account. Taxation

View full text Add to dashboard Cite

show abstract

“…Finally, using French listed companies as the sample, Cazavan-Jeny and Jeanjean (2006) find that capitalized R&D is negatively associated with stock prices and returns. Cazavan-Jeny et al (2011) also report that firms do not truthfully convey information about future performance through their decisions to capitalize R&D.…”

Section: Evidence On Opportunism Versus Signaling Of Capitalized Randd mentioning

confidence: 99%

“…(e.g., Green et al, 1996;Oswald & Zarowin, 2007a), or Australia (e.g., Abrahams & Sidhu, 1998;Ahmed & Falk, 2006;Ang et al, 2008;Wyatt, 2005) that feature strong legal enforcement. In contrast, research that finds unfavorable motivations and consequences of R&D capitalization is done in countries with weak legal environments, such as Italy or France (Markarian et al, 2008;Cazavan-Jeny & Jeanjean, 2006;Cazavan-Jeny et al, 2011). The weak legal and market institutions in China (Shleifer & Vishny, 1997;Zingales, 1994) imply a high possibility and frequency of earnings-management behavior.…”

Section: Auditors' Fee Reaction To Clients' Randd Capitalization Behaviorsmentioning

confidence: 99%

R&D capitalization and audit fees: Evidence from China

Cheng

Kuo

2016

Advances in Accounting

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R&D and Intangibles

Sougiannis

2015

Wiley Encyclopedia of Management

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Empirical studies have established that corporate intangibles assets such as Research and Development (R&D), employee satisfaction, firm reputation and celebrity status, are valued by market participants. R&D expenditures lead to higher future profitability and stock market investors price them positively. These investments do not appear to be superior since the average stock returns of R&D and non‐R&D firms are comparable. However, portfolios of high R&D intensity and of large unexpected increases in R&D earn positive future abnormal returns. This has sparked an ongoing debate as to whether the abnormal returns represent investor mispricing or compensation for risk. Since R&D spending is treated as a period expense in the financial reports, the potential mispricing has also been attributed to the limited disclosures and accounting practiced. Financial analysts appear to play an important role in compensating for R&D‐related financial reporting deficiencies but the compensation is far from complete. Successful R&D activity leads to patents which have also been shown to be positively associated with stock market values and future earnings. However, results show that neither analysts nor investors appear to fully understand the implications of patent information. Overall, there is a need for continued effort by policy makers to address intangibles‐related information deficiencies.

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Accounting choice and future performance: The case of R&D accounting in France

Cited by 96 publications

References 35 publications

RD activity and operating performance of small and medium-sized enterprises (SMEs): The case of a small open economy

RD activity and operating performance of small and medium-sized enterprises (SMEs): The case of a small open economy

R&D capitalization and audit fees: Evidence from China

R&D and Intangibles

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