Author Identifier

Erwei Xiang

ORCID: https://orcid.org/0000-0001-9950-6148

Document Type

Journal Article

Publication Title

Journal of Contemporary Accounting & Economics

Publisher

Elsevier

School

School of Business and Law

Funders

Edith Cowan University - Open Access Support Scheme

Comments

Xiang, E., Gasbarro, D., Cullen, G., & Ruan, W. (2020). Does R&D expenditure volatility affect stock return?. Journal of Contemporary Accounting & Economics, Article 100211. https://doi.org/10.1016/j.jcae.2020.100211

Abstract

The relation between the volatility of R&D expenditure and stock return may be influenced by disruptive adjustment costs, emerge from earnings management, or reflect the actions of managers attempting to control the overinvestment of technocrats. Using 5,178 publicly listed US firms from 1980 to 2018, we find a negative relation between R&D volatility and return, which is moderated by firm size. We conclude that investors react negatively to the disruptive effect of changes to R&D expenditure, except for small firms. In small firms, the benefit of the governance mechanism of varying R&D expenditure to control overinvestment outweighs the cost of disruption.

DOI

10.1016/j.jcae.2020.100211

Creative Commons License

Creative Commons Attribution 4.0 License
This work is licensed under a Creative Commons Attribution 4.0 License.

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