An Extended Accelerator Model of R&amp;D and Physical Investment

Mairesse, Jacques; Siu, Alan

doi:10.3386/w0968

Cited by 20 publications

(18 citation statements)

References 11 publications

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“…The sample variance in the growth rate of investment is four times as large as the variance in the growth rate of R&D. For only seven of the 191 firms is the ranking of these variances reversed. This conclusion also holds for the (log) levels and has been observed in other samples (see Mairesse and Siu (1984)). Since R&D moves more smoothly over time than investment, the neoclassical model of investment is compelled to rationalize this empirical fact by finding that R&D is subject to more severe costs of adjustment than capital investment.…”

supporting

confidence: 82%

The Interaction Between Capital Investment and R&D in Science-Based Firms

Lach

Schankerman

1987

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supporting

confidence: 82%

The Interaction Between Capital Investment and R&D in Science-Based Firms

Lach

Schankerman

1987

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mentioning

confidence: 98%

R&D, Patents, and Market Value Revisited: Is There A Second (Technological Opportunity) Factor?

Griliches

Hall

Pakes³

1991

Economics of Innovation and New Technology

208

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It is known that innovations in the market value of manufacturing firms and their R&D expenditures are related (Pakes 1985, Mairesse andSiu 1984). This could be due to shifts in the demand for the output of a particular firm, to shifts in the technological opportunities available to the firm, or to both. In this paper we use innovations in patenting activity as an additional piece of information about technological shifts in order to attempt to identify the relative importance of these two types of shocks. We build a simple two-factor model of innovations in sales, investment, R&D investment, patent applications, and the rate of return to holding a share of the firm, and estimate it using a time series-cross section of U.S. manufacturing firms (340 firms from 1973 to 1980): Except in the pharmaceutical industry. we find little evidence of a second factor which can be clearly identified with technological opportunity, although there is evidence of a long-run growth factor linking both types of investment, patenting activity, and the market value of the firm. We then go on to demonstrate that this null result could be caused by our use of patent counts as a indicator of the value of the underlying patents: under reasonable assumptions on the value distribution. the changes in patenting rates can account for only a small fraction of the changes in the stock market value of the firm, and hence provide essentially no additional information beyond what is already contained in the R&D variables. However, the pharmaceutical industry is an important exception to this: here we find that the technological factor is almost as important as the short-run demand factor in explaining movements in the rate of return.

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“…Specifically, Chiao (2001), who studied the short run and long run connection between a firm"s R&D investment and the firm"s financial outcome, pointed out that the long run correlation between a firm"s R&D investment and financial performance was positive while the short run relationship is bi-directional. Mairesse and Siu (1984) also carried on a study that revealed no short run connection between a firm"s R&D expense and financial performance. Thus, in our study, we will examine the relationship between a firm"s previous year"s R&D expenditure as an instrumental variable and the firm"s current year financial performance by using the 1-year lagged value of R&D expense to examine the long term effect of research and development activities on a firm"s financial performance.…”

Section: Research and Developmentmentioning

confidence: 99%

Impact of Intangible Assets on Profitability of Hong Kong Listed Information Technology Companies

Wang²

2014

Business and Economic Research

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The objective of our study is to find out the relationship between intangible assets and financial performance of the listed technology firms in Hong Kong exchange market. Through reviewing the listed firms" annual reports for a five year period (from 2008 to 2012), we have collected data of three kinds of intangible assets, which are research and development cost, employee benefit expense, and sales training. Meanwhile, we have used total assets and net profit as control variables in analyzing the relationship between intangible assets and financial performance, represented by return on assets (ROA) of firms. Using lagged R&D expenditure as instrumental variable; our results suggested that research and development investment and sales training are beneficial to firms" financial performance while employee benefit expense is not.

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An Extended Accelerator Model of R&D and Physical Investment

Cited by 20 publications

References 11 publications

The Interaction Between Capital Investment and R&D in Science-Based Firms

The Interaction Between Capital Investment and R&D in Science-Based Firms

R&D, Patents, and Market Value Revisited: Is There A Second (Technological Opportunity) Factor?

Impact of Intangible Assets on Profitability of Hong Kong Listed Information Technology Companies

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