FBA SEMINAR SERIES

How does R&D investment drive firm innovations and value creation?

Prof. Kevin OW YONG, Associate Professor of Accounting, Singapore Institute of Technology

Date:         22 February 2023 (Wednesday)
Time:        3:00pm – 4:00pm
Venue:      Online via Zoom
Host:         Prof. Desmond YUEN, Associate Professor in Accounting
Online registration: https://umac.au1.qualtrics.com/jfe/form/SV_3w1JatNuFQAAEIe

Registration deadline: 20 February 2023

Abstract

This paper examines how firm-specific investment in research and development (R&D) affects product innovations and firm valuation in China. Despite the perceived benefits, the inherent high risk of R&D makes it unclear how corporate R&D activities translate into innovative output and affect firm valuation. Using comprehensive panel data of corporate R&D activities in China, we find that the firm’s R&D investment has a positive impact on its granted patents. The positive R&D effect on firm innovations is more pronounced for firms with less agency problems, more transparent information environment, or higher growth prospects. With regard to alternative accounting treatments of expensing versus capitalizing R&D expenditure, we find evidence that R&D capitalizing firms in China exhibit higher R&D efficiency than do R&D expensing firms. Further, we document that firms with significant large increases in R&D investments are able to generate higher firm value, indicating economies of scale in R&D investment.

Speaker

Prof. Kevin OW YONG is Associate Professor of Accounting at Singapore Institute of Technology. He received his PhD degree from Duke University. He currently sits on the IS Chartered Accountant Journal Editorial Advisory Panel. He is also a member of the UAFRS Advisory Council with Valens Research. He has previously served on the Candidate Programmes Committee with the CFA Society (Singapore) and was on the advisory board with Brahm Centre, a non-profit charity organization as their Finance Advisor. His work has been published in numerous well known accounting research journals including the Review of Accounting Studies, Contemporary Accounting Research, Journal of Business Finance  and Accounting, Journal of Accounting and Public Policy, European Accounting Review, Advances in Accounting and China Journal of Accounting Research. He has also received invitations to speak at several top ranking China’s universities and other famous universities in the Asia-Pacific region. In recognition of his research work, he has won the Second Best Paper Award at the Chicago Quantitative Alliance Academic Competition, the Best Paper Award from the Third International Conference of Accounting and Finance (Danang City, Vietnam), and the Best Paper Award from the China Journal of Accounting Research Symposium (Guangzhou, China).

All are welcome!