Environmental R&D and the Uncertainty of Future Earnings
Colorado State University - Department of Accounting
June 3, 2009
This paper examines whether the variability in the future earnings stream generated by the investment in environmentally-related R&D projects is different than that created by the investment in other R&D projects. To carry out this investigation, I decompose total R&D expenditures into two components: those related to R&D projects aimed at reducing the firm’s costs to comply with environmental legislation (i.e., the environmental component), and those related to all other R&D projects, which are focused on increasing the firm’s revenues and/or decreasing its other operating costs (i.e., the residual component). As predicted, I find that the environmental component of R&D expenditures contributes significantly less to the variability of future earnings than the residual component.
Number of Pages in PDF File: 41
Keywords: R&D, subsequent benefits, earnings variability, environmental costs
JEL Classification: M41, M43, O30working papers series
Date posted: June 4, 2009
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo1 in 0.766 seconds