The Valuation of R&D Expenditures in Japan

22 Pages Posted: 8 Nov 2010

See all articles by Pascal Nguyen

Pascal Nguyen

Neoma Business School; University of Technology Sydney (UTS); Financial Research Network (FIRN)

Sophie Nivoix

Universite de Poitiers

Mikiharu Noma

Hitotsubashi University - Graduate School of International Corporate Strategy

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Abstract

The difficulty to measure the long-term benefits of R&D expenditures and the distortions induced by R&D accounting suggest that R&D-intensive firms could be undervalued. Using several methods commonly applied to detect the abnormal returns associated with mispricing, we find little evidence that the value of R&D investments has been underestimated in the Japanese stock market. Given that R&D accounting rules in Japan are similar to those in United States, the results appear to reject the hypothesis that accounting biases are the cause of the undervaluation of R&D investments observed in the United States.

Suggested Citation

Nguyen, Pascal and Nivoix, Sophie and Noma, Mikiharu, The Valuation of R&D Expenditures in Japan. Accounting & Finance, Vol. 50, No. 4, pp. 899-920, December 2010. Available at SSRN: https://ssrn.com/abstract=1702587 or http://dx.doi.org/10.1111/j.1467-629X.2010.00345.x

Pascal Nguyen

Neoma Business School ( email )

1 Rue du Maréchal Juin
Mont Saint Aignan Cedex, 76825
France
+33 2 3282 5774 (Phone)

University of Technology Sydney (UTS) ( email )

15 Broadway, Ultimo
+61 2 9514 7718 (Phone)
+61 2 9514 7711 (Fax)

HOME PAGE: http://datasearch.uts.edu.au/business/finance/staff/StaffDetails.cfm?UnitStaffId=4415

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Sophie Nivoix

Universite de Poitiers ( email )

93 avenue du recteur Pineau
Poitiers, 86000
France

Mikiharu Noma

Hitotsubashi University - Graduate School of International Corporate Strategy ( email )

2-1-2 Hitotsubashi, Chiyoda-ku
Tokyo 101-0003, Chiyoda-ku 101-8439
Japan

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