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Earnings Expectations and Discretionary Research and Development Spending

Accounting horizons, 1994-12, Vol.8 (4), p.43 [Peer Reviewed Journal]

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Title:
Earnings Expectations and Discretionary Research and Development Spending
Author: Perry, Susan ; Grinaker, Robert
Subjects: Accounting ; Capital expenditures ; Compensation plans ; Contract negotiations ; Corporate finance ; Earnings management ; Earnings per share ; Economic models ; FASB statements ; GNP ; Gross National Product ; R&D ; Regression analysis ; Research & development ; Research & development expenditures ; Studies
Is Part Of: Accounting horizons, 1994-12, Vol.8 (4), p.43
Description: A study examines the relationship between expenditures for research and development (R&D) and earnings expectations. The analysis examines changes in R&D expenditures when earnings vary from analysts' predictions and finds evidence of a direct relation between the variables. Moreover, after controlling for financial condition and investment opportunities, the analysis finds the relationship between unexpected R&D spending and unexpected earnings appears to be approximately linear over unexpected earnings values. To the extent that managers focus on short-run earnings, R&D spending may be negatively impacted when earnings fall short of analysts' expectations.
Publisher: Sarasota, Fla: Sarasota, FL :American Accounting Association, c1987
Language: English
Identifier: ISSN: 0888-7993
EISSN: 1558-7975
Source: ProQuest Central

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