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政大機構典藏 > 商學院 > 財務管理學系 > 期刊論文 > Item 140.119/98770

Please use this identifier to cite or link to this item: https://nccur.lib.nccu.edu.tw/handle/140.119/98770

Title:	The Information Content of R&D reductions
Authors:	湛可南 Chan, Konan;Lin, Yueh-hsiang;Wang, Yanzhi
Contributors:	財管系
Keywords:	R&D reductions;Long-run performance;Firm life cycle;Overinvestment;Cost of capital
Date:	2015-12
Issue Date:	2016-07-07 16:03:15 (UTC+8)
Abstract:	An extensive literature shows that R&D intensities and increases are positively related to firm performance, but little research examines the valuation of R&D reductions. This paper fills the void by studying long-term performance following R&D reductions. We find that, contrary to conventional wisdom, large R&D cuts are associated with positive future stock returns. This return drift cannot be explained by asset pricing factors, including R&D intensities and R&D increases. We explore two potential economic motives behind R&D reductions: R&D spillover and firm life cycle. We show that operating performance deteriorates immediately before R&D reductions but exhibits no abnormal pattern afterward. While firm growth falls substantially and variability in profitability reduces, firms with low or declining investment opportunities and mature firms outperform. These findings are inconsistent with the spillover hypothesis, but support the life cycle story that firms attempt to resolve overinvestment in R&D that arises over the course of firm life cycle.
Relation:	Journal of Empirical Finance, 34, 131-155
Data Type:	article
DOI 連結:	http://dx.doi.org/10.1016/j.jempfin.2015.07.006
DOI:	10.1016/j.jempfin.2015.07.006
Appears in Collections:	[財務管理學系] 期刊論文

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