Accounting comparability and corporate innovative efficiency
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Accounting comparability and corporate innovative efficiency
https: //k hot h u vien .comAccounting Comparability and Corporate Innovative EfficiencyJUSTIN CHIRCOPThe Management School. Lancaster University. Bai Accounting comparability and corporate innovative efficiency ilrigg. Lancaster. LAI 4YX. United Kingdom. Phone: +44 1524 - 594634' Fax: +44 1524 847321. e-mail: j.chircop 1 lancaster.ac.uk.DANIEL w. COLLINSHenn.- B. Tippie College of Business. The University of Iowa. Iowa City. IA 52242-1994. United States, Phone +1 319 335 1048. Fax +1-319-335-1956. e-mail: Accounting comparability and corporate innovative efficiency daniel-collinsuiowa.edu.LARS H. HASSThe Management School. Lancaster University. Bailrigg. Lancaster. LAI 4YX. United Kingdom. Phone: +44 1524 - 59398Accounting comparability and corporate innovative efficiency
1’ Fax: +44 1524 847321. e-mail: l.h.hasslancaster.ac.uk.NHAT Ọ. NGUYENDepartment of Accounting. Colorado State University. Rockwell Hall 258. Fort Cohttps: //k hot h u vien .comAccounting Comparability and Corporate Innovative EfficiencyJUSTIN CHIRCOPThe Management School. Lancaster University. Bai Accounting comparability and corporate innovative efficiency from Man,' Barth (the editor), two anonymous reviewers and workshop participants at the University of Padua. University of North Carolina at Chapel Hill. University of Iowa and the University of Lancaster. All remaining errors are our own.Electronic copy available at: https://ssrn.com/abstract28104 Accounting comparability and corporate innovative efficiency 48Accounting Comparability and Corporate Innovative EfficiencyAugust, 2019ABSTRACTWe predict that a firm's greater accounting comparability with its iAccounting comparability and corporate innovative efficiency
ndustry peers facilitates its learning from those peer firms' research and development (R&D) investments, allowing that firm to have greater innovativhttps: //k hot h u vien .comAccounting Comparability and Corporate Innovative EfficiencyJUSTIN CHIRCOPThe Management School. Lancaster University. Bai Accounting comparability and corporate innovative efficiency employing the Almon (1965) distributed lag model. We find that greater accounting comparability leads to enhanced ability to predict future cash flows generated by R&D investments of peer firms. In the cross-section, we observe the relation between accounting comparability and innovative efficiency Accounting comparability and corporate innovative efficiency is stronger if peer firms exhibit higher accounting (accrual) quality and are themselves successful innovators, hl sum, this study shows that a sharedAccounting comparability and corporate innovative efficiency
qualitative characteristic of accounting, namely accounting comparability, is positively associated with innovative efficiency.JEL classifications: Ghttps: //k hot h u vien .comAccounting Comparability and Corporate Innovative EfficiencyJUSTIN CHIRCOPThe Management School. Lancaster University. Bai Accounting comparability and corporate innovative efficiency l comments from Mary Barth (the editor), two anonymous reviewers and workshop participants at the University of Padua. University of North Carolina at Chapel Hill. University of Iowa and the University of Lancaster.available at. https://ssm.com/abstract28104481. IntroductionThis study examines the a Accounting comparability and corporate innovative efficiency ssociation between accounting comparability of a given firm (which we refer to as the subject linn) with its industry' peers and that film’s innovativAccounting comparability and corporate innovative efficiency
e investment efficiency.* 1 The Financial Accounting Standards Board (FASB 2010) emphasizes the importance of accounting comparability in investment dhttps: //k hot h u vien .comAccounting Comparability and Corporate Innovative EfficiencyJUSTIN CHIRCOPThe Management School. Lancaster University. Bai Accounting comparability and corporate innovative efficiency rly evaluate similarities and differences in investment opportunities. Following De Franco et al. (2011). we define accounting comparability as the closeness between two firms’ accounting systems that map economic events onto accounting earnings. Accounting comparability improves if firms facing sim Accounting comparability and corporate innovative efficiency ilar economic events produce similar accounting earnings numbers.To more closely link films’ performance measurements with innovative activities, we eAccounting comparability and corporate innovative efficiency
stimate accounting comparability using pro-forma capitalized research and development (R&D) earnings that link lagged R&D expenditures to future profihttps: //k hot h u vien .comAccounting Comparability and Corporate Innovative EfficiencyJUSTIN CHIRCOPThe Management School. Lancaster University. Bai Accounting comparability and corporate innovative efficiency nting comparability with its industry peers will facilitate its learning from the R&D investment outcomes of peer firms, leading it to make better R&D investments. We argue one way that accounting comparability improves learning is by enhancing the prediction of future operating cash flows of peer f Accounting comparability and corporate innovative efficiency irms, particularly innovative peers. The enhanced predictive ability that arises from greater accounting comparability is particularly important givenAccounting comparability and corporate innovative efficiency
that future benefits arising from R&D investments are more uncertain than from capital investments■ We use the term "subject fum" to refer to the firhttps: //k hot h u vien .comAccounting Comparability and Corporate Innovative EfficiencyJUSTIN CHIRCOPThe Management School. Lancaster University. Bai Accounting comparability and corporate innovative efficiency h subject firm has unique innovative efficiency measures and a unique accounting comparability measure with its peer group. See Section 4.3 for a more complete discussion of how accounting comparability is computed. To be a subject firm, the firm must have at least one patent awarded by the U.S. Pat Accounting comparability and corporate innovative efficiency ent Office during our sample period.1Electronic copy available at. https ://ssm.com/abstract2810448(Kothari et al. 2002). Therefore, we expect firms wAccounting comparability and corporate innovative efficiency
ith greater accounting comparability with industry peers will generate more innovations and innovations of higher quality, which are key measures of chttps: //k hot h u vien .comAccounting Comparability and Corporate Innovative EfficiencyJUSTIN CHIRCOPThe Management School. Lancaster University. Bai Accounting comparability and corporate innovative efficiency rm's own accounting information affects that linn’s own investment decisions, or of the literature that investigates how accounting quality attributes of subject firms affect peer linns’ investment outcomes and vice versa.* In this paper, we study the effect of a shared qualitative characteristic of Accounting comparability and corporate innovative efficiency accounting, namely the comparability of accounting choices of a given linn with industry peers and how accounting comparability affects that linn’s iAccounting comparability and corporate innovative efficiency
nnovative efficiency, which is a key determinant of long-term success and competitiveness in a dynamic global economy. Using a large sample of U.S. fihttps: //k hot h u vien .comAccounting Comparability and Corporate Innovative EfficiencyJUSTIN CHIRCOPThe Management School. Lancaster University. Bai Accounting comparability and corporate innovative efficiency y peer firms, it generates more patents and more citations per dollar of R&D investment after controlling for previously documented determinants of innovation. Our findings suggest accounting comparability has an economically significant relation with innovative efficiency. We estimate that a one st Accounting comparability and corporate innovative efficiency andard deviation increase in accounting comparability yields a roughly 12 percent increase in innovative efficiency for the average firm in our sampleAccounting comparability and corporate innovative efficiency
.We find that accounting comparability can improve innovative efficiency by enhancing the subject firm's ability to predict peer firms’ future cash flhttps: //k hot h u vien .comAccounting Comparability and Corporate Innovative EfficiencyJUSTIN CHIRCOPThe Management School. Lancaster University. Bai Accounting comparability and corporate innovative efficiency .g. patent applications and FDA approvals) and determining how this; For example. Biddle Ct al (2009) examine how a Ann’s financial reporting quality affects that firm’s own investment efficiency, while Badertscher et al. (2013). Beatty et al. (2013). and Shroff et al. (2013) show tliat a turn’s acc Accounting comparability and corporate innovative efficiency ounting information affects peel funis’ investment decisions and vice versa.2Electronic copy available at. https://ssm.com/abstract2810448informationAccounting comparability and corporate innovative efficiency
changes over time, a firm can ascertain which portfolio of R&[) investments leads to successful outcomes that enhance peer firms' future cash flows. Ihttps: //k hot h u vien .comAccounting Comparability and Corporate Innovative EfficiencyJUSTIN CHIRCOPThe Management School. Lancaster University. Bai Accounting comparability and corporate innovative efficiency adjusted operating cash flows for the average firm in our sample. We reason that accounting comparability facilitates a firm's understanding of how peer firms' portfolios of risky R&D investments map onto future cash flows, which allows a subject firm to make more efficient R&D decisions.To further Accounting comparability and corporate innovative efficiency corroborate our main findings, we test for cross-sectional differences in the relationship between accounting comparability and innovative efficiencyAccounting comparability and corporate innovative efficiency
. Specifically, we find the positive relationship between accounting comparability and innovative efficiency is stronger (more positive) when industryhttps: //k hot h u vien .comAccounting Comparability and Corporate Innovative EfficiencyJUSTIN CHIRCOPThe Management School. Lancaster University. Bai Accounting comparability and corporate innovative efficiency in finding that accounting comparability enhances firms’ innovative efficiency mitigates concerns of endogeneity and correlated omitted variables.Gọi ngay
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