Proactive R&D management and information disclosure : ramifications for innovative chemicals companies
A common view is that investors view steady firm-level R&D investment as evidence of the firm's commitment to R&D-based innovation. However, recent research shows that R&D expenditure volatility is positively related to firm performance, suggesting that higher levels of...
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Dokumenttypen: | Artikel |
Medientypen: | Text |
Erscheinungsdatum: | 2014 |
Publikation in MIAMI: | 12.03.2014 |
Datum der letzten Änderung: | 21.03.2016 |
Quelle: | Journal of Business Chemistry, 11 (2014) 1, S. 15-32 |
Angaben zur Ausgabe: | [Electronic ed.] |
Fachgebiet (DDC): | 330: Wirtschaft |
Lizenz: | InC 1.0 |
Sprache: | English |
Anmerkungen: | Section "Research Paper" |
Format: | PDF-Dokument |
URN: | urn:nbn:de:hbz:6-33399599303 |
Permalink: | https://nbn-resolving.de/urn:nbn:de:hbz:6-33399599303 |
Onlinezugriff: | 2014_vol-11_iss1_15-32.pdf |
A common view is that investors view steady firm-level R&D investment as evidence of the firm's commitment to R&D-based innovation. However, recent research shows that R&D expenditure volatility is positively related to firm performance, suggesting that higher levels of R&D expenditure volatility indicate effective governance of the R&D function. This paper shows that the relationship between R&D expenditure volatility and firm performance is stronger within firms that have higher levels of information asymmetry between the firm and its investors. This finding suggests that investors interpret R&D expenditure volatility as a good thing, and that this form of information takes on more significance in the absence of better sources of evidence. Innovative chemicals companies may reconsider conventional wisdom suggesting that consistent R&D expenditure conveys an emphasis on R&D-based innovation. Instead, firms can explain to investors that significant changes in R&D expenditure indicate that management is proactively managing R&D projects and combating R&D over investment.