The valuation relevance of R&D expenditures: Time series evidence

Jeffrey L. Callen; Mindy Morel

doi:10.1016/j.irfa.2004.10.007

The valuation relevance of R&D expenditures: Time series evidence

Jeffrey L. Callen
, Mindy Morel

Research output: Contribution to journal › Article › peer-review

30 Scopus citations

Abstract

The literature on the valuation relevance of R&D investments is based primarily on cross-sectional regressions or panel data regressions with time and firm (or industry) fixed effects such that the parameters relating R&D to market value are cross-sectionally constant. In an alternative approach, this paper investigates the value relevance of R&D investment using an earnings-based time series valuation model. Model parameters are estimated for each firm separately. In contradistinction to the results obtained from cross-sectional and fixed effects panel models, this study finds weak empirical support at best for the value relevance of R&D expenditures at the firm level.

Original language	English
Pages (from-to)	304-325
Number of pages	22
Journal	International Review of Financial Analysis
Volume	14
Issue number	3
DOIs	https://doi.org/10.1016/j.irfa.2004.10.007
State	Published - 20 Jun 2005
Externally published	Yes

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 9 Industry, Innovation, and Infrastructure

Keywords

Market value
Ohlson model
R&D
Time series

ASJC Scopus subject areas

Finance
Economics and Econometrics

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10.1016/j.irfa.2004.10.007

Cite this

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title = "The valuation relevance of R\&D expenditures: Time series evidence",

abstract = "The literature on the valuation relevance of R\&D investments is based primarily on cross-sectional regressions or panel data regressions with time and firm (or industry) fixed effects such that the parameters relating R\&D to market value are cross-sectionally constant. In an alternative approach, this paper investigates the value relevance of R\&D investment using an earnings-based time series valuation model. Model parameters are estimated for each firm separately. In contradistinction to the results obtained from cross-sectional and fixed effects panel models, this study finds weak empirical support at best for the value relevance of R\&D expenditures at the firm level.",

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AU - Morel, Mindy

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AB - The literature on the valuation relevance of R&D investments is based primarily on cross-sectional regressions or panel data regressions with time and firm (or industry) fixed effects such that the parameters relating R&D to market value are cross-sectionally constant. In an alternative approach, this paper investigates the value relevance of R&D investment using an earnings-based time series valuation model. Model parameters are estimated for each firm separately. In contradistinction to the results obtained from cross-sectional and fixed effects panel models, this study finds weak empirical support at best for the value relevance of R&D expenditures at the firm level.

KW - Market value

KW - Ohlson model

KW - R&D

KW - Time series

UR - https://www.scopus.com/pages/publications/20344366784

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JO - International Review of Financial Analysis

JF - International Review of Financial Analysis

IS - 3

ER -

The valuation relevance of R&D expenditures: Time series evidence

Abstract

UN SDGs

Keywords

ASJC Scopus subject areas

Access to Document

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