Sticky behavior of R&D costs and its relevance to firm value : evidence from listed companies in Korea
Moon Hyun Kym
Purpose: The purpose of this study is to investigate the impact of sticky behavior in R&D costs on firm value. The study aims to gain insights into whether the stickiness of R&D costs is a rational choice based on managerial foresight or if it stems from managerial self-interest. Design/methodology/approach: For the regression analysis, a modified version of Ohlson's accounting-based valuation model (1995) was used to assess the impact of R&D costs on firm value. and the stickiness of R&D costs was measured using the model proposed by Homburg & Nasev (2009). International Financial Reporting Standards were adopted in Korea in 2011, and empirical analysis was subsequently conducted using data from listed companies. Findings: The empirical results were as follows. Firstly, R&D costs reported as expenses showed a negative (-) correlation with firm value, while the stickiness of R&D costs was found to have a positive (+) impact on the value relevance of earnings. Secondly, R&D costs reported as assets did not have a significant impact on firm value, and the stickiness of R&D costs did not have a significant impact on the value relevance of net assets. Research limitations/implications: Overall, the findings of this study support the accounting treatment of R&D costs as expenses. Moreover, the study reveals that the sticky behavior of R&D costs helps alleviate the negative value relevance of R&D expenses. Originality/value: This study distinguished between capitalized R&D costs and expensed R&D costs, and examined their value relevance by investigating the impact of sticky behavior on earnings and net assets.
Year of publication: |
2023
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Authors: | Kym, Moon Hyun |
Published in: |
Global business and finance review. - Seoul : People & Global Business Association, ISSN 2384-1648, ZDB-ID 2839730-7. - Vol. 28.2023, 4, p. 77-89
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Subject: | Expensed R&D costs | Capitalized R&D costs | Sticky Cost Behavior | Value Relevance | Aktiengesellschaft | Listed company | Kapitalkosten | Cost of capital | Unternehmenswert | Firm value | Südkorea | South Korea | Kosten | Costs | Kostenmanagement | Cost management | Kostenrechnung | Cost accounting |
Saved in:
freely available
Type of publication: | Article |
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Type of publication (narrower categories): | Aufsatz in Zeitschrift ; Article in journal |
Language: | English |
Other identifiers: | 10.17549/gbfr.2023.28.4.77 [DOI] hdl:10419/305909 [Handle] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10014372607
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