An Exploration of the R & D Value beyond the Generally Accepted Accouting Principles


This paper utilized the real R & D option theory especial the Bellalah [1] information cost model as the discussion base for the exploration of R & D value. We extended Bellalah’s model as to add the factors of Poisson event and exponential decay to approximate the reality; we calculated the derivative value of R & D investment and relaxed the Generally Accepted Accounting Principles (GAAP) as to deem the accumulated R & D investment the capital owned by a firm and to evaluate it as well. The empirical results enlightened us: our modified model meet with reality better than the original model; the derivative R & D value have explanatory power to the equity behavior especial the risk magnitude proxied by β and lastly, to entirely expense the R & D investment could be problematic since R & D investment own the property of capital.

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Y. Lan, "An Exploration of the R & D Value beyond the Generally Accepted Accouting Principles," Technology and Investment, Vol. 1 No. 2, 2010, pp. 149-153. doi: 10.4236/ti.2010.12018.

Conflicts of Interest

The authors declare no conflicts of interest.


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