Journal of Accounting and Economics Vol. 52 No. 1 2011
Scale effects of R&D as reflected in earnings and returns
Abstract
Using returns to scale as a conceptual foundation, we explore how R&D-related earnings performance and earnings variability depend upon firm size. We find that the positive association between the level of future earnings and R&D intensity increases with firm size, and that the positive association between the volatility of future earnings and R&D intensity decreases with firm size, consistent with R&D productivity increasing with scale. We also show that R&D scale is associated with lower market returns, consistent with the idea that R&D investment risk declines with scale.
- DOI
- 10.1016/j.jacceco.2011.02.003
- Volume
- 52
- Issue
- 1
- Pages
- 62-80
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib