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Income Smoothing and Discretionary R&D Expenditures of Japanese Firms

Contemporary accounting research, , Vol.17 (2), p.263-302 [Peer Reviewed Journal]

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Title:
Income Smoothing and Discretionary R&D Expenditures of Japanese Firms
Author: MANDE, VIVEK ; FILE, RICHARD G. ; KWAK, WIKIL
Subjects: Capital expenditures ; Corporate finance ; D expenditures ; Earnings management ; Econometrics ; Economic growth ; Foundries ; Hypotheses ; Income smoothing ; Japan ; Japanese managers ; Managers ; Profitability ; R& ; R&D ; Regression analysis ; Research & development ; Research & development expenditures ; Research and development ; Size of enterprise ; Studies
Is Part Of: Contemporary accounting research, , Vol.17 (2), p.263-302
Description: During the recent recession (1991 to present), Japanese firms decreased their spending on R&D for the first time since World War II. The decreases have raised concerns that Japanese managers may be making suboptimal allocations to R&D. We test whether Japanese managers adjust R&D based on short‐term performance. Our results show that Japanese firms in several industries adjust their R&D budgets to smooth profits. Interestingly, adjustments to R&D are larger in expansion years. These results, similar to those documented with U.S. managers, point to myopic decision making by Japanese managers.
Publisher: Oxford, UK: Blackwell Publishing Ltd
Language: English
Identifier: ISSN: 0823-9150
EISSN: 1911-3846
DOI: 10.1506/QXBV-UY71-A6W1-FWT4
Source: Alma/SFX Local Collection
ProQuest Central

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