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To What Extent are R&D and Knowledge Spillovers Valued by the Market

To What Extent are R&D and Knowledge Spillovers Valued by the Market Most of the past studies have managed to confirm the valuerelevance of R&D, but few of them have formally addressed the issue of knowledge spillovers. In reality, firms improve their knowhow both by producing new knowledge and by learning from others. The objective of this study is to examine the relevance of R&D and knowledge spillovers as an explanation for the observed inconsistency between market and book values. While the level of R&D is measured by R&D expenses and patent counts, the intensity of knowledge spillovers is measured by tracing the linkages between inventions across time as established by patent citations. Specifically, knowledge spillovers are decomposed into intraindustry, internal, and interindustry spillovers. The empirical findings from this study conclude that R&D and knowledge spillovers are valuerelevant. The results also suggest that, among the three components of spillovers, intraindustry spillovers have the strongest impact on markettobook ratios. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Pacific Accounting Review Emerald Publishing

To What Extent are R&D and Knowledge Spillovers Valued by the Market

Fung, Michael
Pacific Accounting Review , Volume 15 (2): 22 – Feb 1, 2003
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References (43)

Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0114-0582
DOI
10.1108/eb037973
Publisher site
See Article on Publisher Site

Abstract

Most of the past studies have managed to confirm the valuerelevance of R&D, but few of them have formally addressed the issue of knowledge spillovers. In reality, firms improve their knowhow both by producing new knowledge and by learning from others. The objective of this study is to examine the relevance of R&D and knowledge spillovers as an explanation for the observed inconsistency between market and book values. While the level of R&D is measured by R&D expenses and patent counts, the intensity of knowledge spillovers is measured by tracing the linkages between inventions across time as established by patent citations. Specifically, knowledge spillovers are decomposed into intraindustry, internal, and interindustry spillovers. The empirical findings from this study conclude that R&D and knowledge spillovers are valuerelevant. The results also suggest that, among the three components of spillovers, intraindustry spillovers have the strongest impact on markettobook ratios.

Journal

Pacific Accounting Review – Emerald Publishing

Published: Feb 1, 2003

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