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Medientyp:
E-Book
Titel:
Asset recognition and differential information content in capitalized and expensed R&D expenditures
:
Evidence from corporate financing policies and valuation
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments October 1, 2020 erstellt
Beschreibung:
In Korea, firms can recognize some research and development (R&D) expenditures as assets if they satisfy capitalization criteria and expense the rest. We show that each of the expensed and capitalized components conveys differential information that helps explain corporate financing policies and that investors use this information when evaluating such policies. We find that the positive (negative) association between R&D expenditures and cash holdings (leverage) and the positive R&D expenditure–cash flow sensitivity documented in previous studies are attributable to the expensed components. Such findings are consistent with the high information asymmetry and uncertainty that are inherent to the expensed R&D components as well as the low uncertainty and information asymmetry of the recognized (capitalized) R&D components. Seasoned equity offering announcement returns (the marginal value of cash) are positively associated only with the capitalized (expensed) components of R&D expenditures, suggesting that the expensed and capitalized portions of R&D convey differential information content to investors