| Summary: | 碩士 === 朝陽科技大學 === 會計所 === 96 === Franzen and Radhakrishnan (2006) classified firms into loss vs. profit types and examined the possible differentially value-relevance across those two types of firms through R&D expenditure embedded in earnings. They conjecture that the difference in value-relevance will arise because the informativeness of earnings with respect to the benefits of R&D activity is different across loss and profit firms. However, using profit and lose types to examine the R&D performance on accounting numbers’ relative value-relevance changes like other single proxy, e.g., Tobin''s Q, M/B, or patent etc., to some extent simplify the complicated relationship between R&D performance and accounting earnings and book value of equity. The present study is motivated to integrate various R&D performance measure, RD_INDEX, to capture complete R&D performance, then, examines the effects of R&D performance measures on the value-relevance of accounting information. In other words, this study bases on Ohlson (1995) valuation model to examine the effects of integrated R&D performance on the relative value-relevance of book value of equity and earnings.
The empirical results indicate that the higher R&D performance which measured by RD_INDEX is accompanied with higher value-relevance of accounting numbers. Moreover, the higher RD_INDEX is also accompanied with the higher value-relevance of EPS. Our hypotheses gain confirmatory supports. Nonetheless, it is surprised to find that the higher RD_INDEX entails with the more value-relevance of book value of equity. It suggests that the possible trade-off association between earnings and book value of equity which evidenced by prior literature is not supported in this study.
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