Income Smoothing and Discretionary R&D Expenditures of Japanese Firms*
Contemporary Accounting Research
2000
Abstract 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.
- DOI
- 10.1506/qxbv-uy71-a6w1-fwt4
- Volume
- 17 (2)
- Pages
- 263-302
- Language
- en
- Export
- BibTeX
- Sources
- openalex crossref