2015
DOI: 10.1111/radm.12143
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The impact of value‐relevant accounting rules on innovative activities

Abstract: The purpose of this paper is to examine the impact of value-relevant accounting rules on corporate innovative activities. Using US data from 1972 to 2012, we find that valuerelevant accounting rules help innovative companies to reduce R&D funding gaps, which is conducive to companies' innovative activities and potential long-term benefits. However, a higher risk premium is required by shareholders of innovative companies. Additionally, we find not only that R&D spending is more sensitive to future earnings var… Show more

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Cited by 5 publications
(4 citation statements)
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“…The key approach in the majority of the early studies such as Hall and Vopel () and Hall et al (, ) was to relate the market value of a company to the value of its knowledge assets with indicators such as R&D and patent citations, indicating a positive relationship. Lin et al () use R&D, intangible assets, leverage and firm size as a benchmark, including R&D in five lags to show the dynamics of R&D. They used Tobin's Q as a firm performance measure, suggesting that intangibles have a positive impact on firm performance, with leverage affecting firm performance negatively.…”
Section: Literature Review and Hypotheses Developmentmentioning
confidence: 99%
See 1 more Smart Citation
“…The key approach in the majority of the early studies such as Hall and Vopel () and Hall et al (, ) was to relate the market value of a company to the value of its knowledge assets with indicators such as R&D and patent citations, indicating a positive relationship. Lin et al () use R&D, intangible assets, leverage and firm size as a benchmark, including R&D in five lags to show the dynamics of R&D. They used Tobin's Q as a firm performance measure, suggesting that intangibles have a positive impact on firm performance, with leverage affecting firm performance negatively.…”
Section: Literature Review and Hypotheses Developmentmentioning
confidence: 99%
“…Lin et al () use financial constraint in their analysis as an explanatory variable in their estimation and find a negative relationship with firm performance (also see Mallick and Yang, (2011)). Additionally, Lin et al include intangible assets, goodwill and research and development to capture innovative activities.…”
Section: Literature Review and Hypotheses Developmentmentioning
confidence: 99%
“…The relationship between Accounting Information Systems (AIS) and innovation is a multifaceted area that necessitates further investigation. Several studies have explored different aspects related to this topic, such as the impact of knowledge management systems on innovation (Elmorshidy, 2018), the mediating role of human capital and management accounting information systems in the relationship between innovation strategy and internal process performance, and their impact on corporate financial performance (Hutahayan, 2020), and the influence of value-relevant accounting rules on innovative activities (Lin et al, 2015).…”
Section: Introductionmentioning
confidence: 99%
“…Firms invest in research and development (R&D) to seize technological opportunities, develop new products, and create competitive advantage. High‐performing firms tend to invest aggressively in R&D (Brown et al, ; Gu, ) and benefit greatly from R&D investment (Griliches, ; Hall et al, ; Lee and Wu, ; Lin et al, ). The rate of return to R&D investment tends to be high: it usually is ‘in the 20–30% range’, although it ‘may be as high as 75% or so’ (Hall et al, , p. 1064).…”
Section: Introductionmentioning
confidence: 99%