Value Relevance of R&D expenses in capital market: A study of brazilian IT sector companies

• Main Authors: Ronan Reis Marçal, Leonardo Flach
• Format: Article
• Language: English
• Published: Universidade do Oeste de Santa Catarina 2020-04-01
• Series: RACE: Revista de Administração, Contabilidade e Economia
• Subjects: R&D; Research and Development; Value Relevance; IT
• Online Access: https://portalperiodicos.unoesc.edu.br/race/article/view/23149

Although R&D expenses be relevant to any company, the IT sector stands out in this way, since these companies make constant investments in these intangibles in order to develop solutions and systems for their clients, so, this study aimed to verify the relevance of R&D expenses for companies in the IT sector listed in B3 between 2010 and 2018. Regressions were performed by least absolute deviations considering the stock price as response variable and R&D expenses as explanatory variable. In addition, complementary analyzes were made using logistic regressions. It was always considered a confidence level of 95%. Our results show that R&D expenses explain the variation in stock prices, as expected. The positive sign indicates that investments in these intangibles increase the market value of IT companies, however, there are limits to these benefits. An interesting comparative is that, for the electric sector, target of the study of Alves, Silva, Macedo, and Marques (2011), R&D expenses did not indicate predictive power against stock prices. This confirms the relevance of this measure to the IT sector given its importance to the activities of these companies. Although there is a common sense of the relevance of R&D expenses for the IT sector, there was no literature that would provide such evidence in an empirical way. This research fills this gap and denotes greater relevance of the accounting information regarding R&D expenses for investors of B3 IT companies.