UK evidence on the market valuation of research and development expenditures

Article Abstract:

An estimation of the value of R&D implicit in the market prices of UK quoted companies points to some evidence that the market places some value on R&D expenditure. There is no evidence, however, that the market has sufficient understanding to differentiate between good and bad R&D projects. An accounting-based valuation model is presented, whose key features are the expression of the excess of market value over book value as a linear function of current residual income and current R&D expenditures.

Finance, Industrial research, Valuation

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Simple resource allocation rules: a note on a generalisation

Article Abstract:

An analysis of generalization for resource allocation rulesis presented. Earlier research has defined payback hurdle ability based on net present value analysis. Decision replication based on such an analysis assumes information access to cash inflow patterns and investment opportunities. It is shown that a general class of cash inflow patterns may be developed to define payback hurdles.

Resource allocation, Present value analysis

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Real options, (dis)investment decision-making and accounting measures of performance

Article Abstract:

It is argued that a residual-income performance measure can be used to aid optimal investment decisions. Although perhaps of little practical use, the technique can be used to compare other performance measures.

Analysis, Investment analysis, Securities analysis, Performance standards, Job performance standards

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