The changing implications of research and development expenditures for future profitability

Curtis, Asher; McVay, Sarah E.; Toynbee, Sara

doi:10.1007/s11142-019-09528-6

Cited by 67 publications

(40 citation statements)

References 32 publications

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“…Moreover, our results support and complement the findings from Aljinović Barać and Muminović [20], who found, on the case of dairy processing industry in Slovenia, Croatia, and Serbia, a negative effect of capital investments on the short-term profitability, also expressed by return on assets, for which, according to the authors, a possible explanation can be found in the time lag between the moment of investment and the moment in the future when investment will generate the profit. Although other researchers have used different measures of profitability in their studies, we can say that in general, the results of this study also support the findings from, for example, Grazzi et al [3], Aw et al [22], Fama and French [25], Yu et al [26], Lööf and Heshmati [27], Johansson and Lööf [28], Amoroso et al [31], Curtis et al [32], who found a positive relationship between capital investments and profitability.…”

Section: Resultssupporting

confidence: 88%

“…Amoroso et al [31], on the case of EU firms, while making distinction between R&D and physical investments, showed that both R&D and physical investments, have a positive effect on the performance, expressed by the operating profit, and that larger firms also get higher returns in the presence of risk. Curtis et al [32], using financial data on mergers and acquisitions, found that capital expenditures, as well as R&D expenditures, have a positive effect on the net profit and future earnings volatility of analyzed firms. Taipi and Ballkoci [33], on a sample of 30 construction firms in Albania, showed that capital investments have a positive effect on their future profitability, expressed by return on assets.…”

Section: Literature Reviewmentioning

confidence: 99%

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Capital Investments and Manufacturing Firms’ Performance: Panel-Data Analysis

et al. 2020

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The main goal of this study was to examine the effects of capital investments on firm performance, using panel-data analysis. For this purpose, financial data were gathered for 60 manufacturing firms based in Serbia, in the period from 2004 to 2016. The main research hypotheses were developed in accordance with the definition, nature, and time aspect of capital investments. Therefore, empirical expectation of this study was that the relationship between capital investments and firm performance should be positive—they probably bring losses to the firm in the short term, but they should increase firm performance in the long term. Finally, the results have indeed shown that capital investments have statistically significant negative effect on the short-term performance, but positive effect on the long-term performance of the analyzed firms, while controlling for time-fixed effects and certain internal factors.

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Section: Resultssupporting

confidence: 88%

Section: Literature Reviewmentioning

confidence: 99%

Capital Investments and Manufacturing Firms’ Performance: Panel-Data Analysis

et al. 2020

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“…If this were the case, we would not obtain empirical results consistent with our hypothesis. Indeed, Curtis et al (2016) report diminishing marginal returns to R&D investment, consistent with increased competition in innovative activities. Also, as suggested by Gunny (2010), meeting earnings benchmarks could signal the quality and confidence of managers to the market.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

The Real Effects of Real Earnings Management: Evidence from Innovation

Bereskin

Hsu

Rotenberg

2018

Contemporary Accting Res

115

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We examine the consequences of real earnings management from an innovation perspective and investigate the patent output of firms likely to be managing earnings through altering their R&D expenditures. We find that R&D cuts related to earnings management lead to fewer patents, less influential patent output, and lower innovative efficiency compared to other R&D cuts. Our results thus suggest that real earnings management may obstruct firms’ technological progress and highlight the potential costs of managerial manipulation of R&D expenditures to alter reported earnings.

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“…are considerably high. Contemporary review papers on uncertainty also suggest the importance of research and development for the mitigation of environmental uncertainty (Curtis et al 2020).…”

Section: Discussionmentioning

confidence: 99%

The effect of uncertainty on the formulation of strategies: a study of selected Indian organizations

2020

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An organization's performance is often claimed to be associated with the business environment, as well as with the organization's strategic response to such an environment. If the environment of an organization is adverse, it may face challenges in getting its required inputs, and in adding value to the society. The objective of the present study is to propose a measure of uncertainty based on a survey of executives from randomly selected companies and present several implications for practice and theory. The present research follows a multi-stage sampling process. In the first stage, a complete list of sectors was taken from CMIE, and four sectors were randomly selected (simple random sampling) from the list. The selected sectors are as follows: chemical, petrochemical industry, agricultural-related industry, and food processing industry. The second stage was also a simple random sampling process. The third stage was a sort of convenience sampling since the top management of the selected organizations proposed the names of the executives to be surveyed. A firm's performance seems to be associated to the business environment, as well as, the organization's strategic response to such an environment. There exists a dynamic relationship between a firm and its business environment. Several limitations and future courses of studies are also presented.

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The changing implications of research and development expenditures for future profitability

Cited by 67 publications

References 32 publications

Capital Investments and Manufacturing Firms’ Performance: Panel-Data Analysis

Capital Investments and Manufacturing Firms’ Performance: Panel-Data Analysis

The Real Effects of Real Earnings Management: Evidence from Innovation

The effect of uncertainty on the formulation of strategies: a study of selected Indian organizations

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