Antecedents and Consequence of R&D Budget in Taiwan

38 Pages Posted: 23 Aug 2010

See all articles by Yu-Lin Chen

Yu-Lin Chen

Chung Yuan Christian University - Department of Accounting

Multiple version iconThere are 2 versions of this paper

Date Written: August 16, 2010

Abstract

This study examines the relationship between R&D budget level and its antecedents, as well as the relationship between R&D budget level and its financial consequence. Utilizing pooled cross-sectional research designs and the Taiwanese firm data for the year 2001-2002, this study finds that historical performance below aspiration, prior year R&D intensity, the stockholdings of directors, duality of CEO, and marginal tax rate are all significant factors in motivating firms to enhance their R&D budget numbers. Firms who are younger, have better historical performance, and face intensified rival R&D would be more likely to reduce their R&D budget levels. Furthermore, R&D budget amount is significantly positively related to future accounting-based performance. While dividing actual R&D budgets into two components - context-driven R&D budgets and firm-specific idiosyncratic component of the R&D budgets, this study finds that both components are positively associated with future accounting-based performance. Firms with greater than predicted R&D budgets outperform those with lower than predicted R&D budgets.

Keywords: R&D budget, Firm Performance, Contextual Factors

JEL Classification: G31, O32

Suggested Citation

Chen, Yu-Lin, Antecedents and Consequence of R&D Budget in Taiwan (August 16, 2010). AAA 2011 Management Accounting Section (MAS) Meeting Paper, Available at SSRN: https://ssrn.com/abstract=1659603 or http://dx.doi.org/10.2139/ssrn.1659603

Yu-Lin Chen (Contact Author)

Chung Yuan Christian University - Department of Accounting ( email )

200, Chung Pei Road, Chung Li District
Taoyuan, 32023
Taiwan

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