How does the stock market respond to R&D cuts used to manage earnings?
| dc.contributor.advisor | Wilson, Ryan | |
| dc.contributor.author | Li, Zhaochu | |
| dc.date.accessioned | 2016-10-27T18:35:11Z | |
| dc.date.issued | 2016-10-27 | |
| dc.description.abstract | Prior research shows returns are positive when firms meet or beat analysts’ consensus forecasts but negative when firms miss. Past studies also show managers frequently cut R&D expenses in order to meet the consensus forecast. Despite these findings, there is limited evidence about how the market responds when firms beat the forecast by cutting R&D. This study shows the stock market penalizes firms that use R&D cuts to manage earnings and exacts a discount to the market reward if beating the forecast requires cutting R&D. The discount is only partial and firms are still better off doing so in the short run. Furthermore, this study shows the R&D cuts used to manage earnings are concentrated in specific industries and are likely temporary, as firms tend to increase R&D spending in the subsequent period. Investors appear to recognize these short-term cuts and treat them similar to accruals. | en_US |
| dc.description.embargo | 10000-01-01 | |
| dc.identifier.uri | https://hdl.handle.net/1794/20438 | |
| dc.language.iso | en_US | |
| dc.publisher | University of Oregon | |
| dc.rights | All Rights Reserved. | |
| dc.subject | Earnings management | en_US |
| dc.subject | Managerial myopia | en_US |
| dc.subject | R&D | en_US |
| dc.title | How does the stock market respond to R&D cuts used to manage earnings? | |
| dc.type | Electronic Thesis or Dissertation | |
| thesis.degree.discipline | Department of Accounting | |
| thesis.degree.grantor | University of Oregon | |
| thesis.degree.level | doctoral | |
| thesis.degree.name | Ph.D. |
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