The Study on Firm-Specific Characteristics of R&D capital ratio

• Main Authors: Chen, Hsiao-Ai, 陳曉嬡
• Other Authors: Fan, Hung-Shu Ph. D.
• Format: Others
• Language: zh-TW
• Published: 2004
• Online Access: http://ndltd.ncl.edu.tw/handle/20632858824448434847

碩士 === 輔仁大學 === 會計學系碩士班 === 92 === Taiwan’s GAAP mandates the full expensing of R&D in financial statements. But lots of literatures show that firms’ market values are positively related to R&D outlays. Using Almon lag procedure to estimate the relation between earnings and R&D series, this paper finds the average contribution to earnings of $1 invested in R&D was $1.1243, and these benefits will accrue in the next 2-5 years. This paper estimates the annual amortization rates are 16.02%, 29.28%, 31.63% and 23.07% respectively. After capitalizing R&D outlays and amortizing R&D capital in the next 2-5 years, this paper computes R&D capital ratio as unamortized R&D capital divided by the difference of equity market value and book value. This paper investigates how different firm-specific characteristics such as R&D intensity, profitability, growth, size, risk, and employees’ bonus sharing are associated with the R&D capital ratio. If investors regard R&D capital as a value-relevant investment, and will reflect R&D capital to the market value of the company’s equity, it will result in lower the R&D capital ratio. The empirical results shows that R&D intensity and risk are positively associated with the R&D capital ratio, and profitability, growth, size and employees’ bonus sharing are negatively associated with the R&D capital ratio. The empirical results show that R&D capital ratio is determined by different factors in different industries. In plastic industry, R&D capital ratio is determined by R&D intensity and employees’ bonus sharing; in textile industry, R&D capital ratio is determined by R&D intensity and risk; in electrical engineering industry, R&D capital ratio is determined by size; in information technology industry, R&D capital ratio is determined by R&D intensity, profitability, growth, size, risk, and employees’ bonus sharing; in other industry, R&D capital ratio is determined by R&D intensity, size, and risk.