Differential Value－Relevance of R&D Expenditures to R&D Leaders and Followers
Asian Tax Journal Vol. 16 No. 1 (2015), pp. 41-65
Abstract
The purpose of this study is to show if there are differences from the view of value－relevancebetween R&D leader and follower under new standards. The samples of this study cover firmshaving December fiscal year from 2000 to 2010 listed in the Korea Stock Exchange markets. The summaries of empirical results are followings:1. From the analysis regarding all the firms, there are differences existing between the leaderand follower. The R&D expenditures of leaders show positive association with firm value inall the cases. As a result, the R&D expenditures for R&D leaders are recognized not as costsbut assets. 2. From the results based on industrial categories, there are differences in leaders in high techand low tech. It is positive that the relationship between R&D expenditures for R&D leadersand the firm value in high－tech industry. It is, however, negative that the relationshipbetween R&D expenditures and the firm value in low－tech one so that the expenditures arerecognized as expense. In other studies, R&D expense is related to the firm value positively. However, this researchshows the market response of R&D expenditure is different based upon the R&D strategy of firmand industrial. This also shows there is conservative prospective in regards to how to consider theR&D expense. Therefore, our findings suggest considering the R&D strategy and industry whendiscussing about the accounting process to improve the issues related to capitalization.
Keywords
- R&D expenditures
- R&D leader and follower
- Value－Relevance
- R&D intensity
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