{"id":{"repo_id":"mit","oai_identifier":"oai:dspace.mit.edu:1721.1/77822"},"canonical_url":"https://search.dev.ndltd.org/etd/mit/oai:dspace.mit.edu:1721.1/77822","repository":{"repo_id":"mit","name":"MIT","base_url":"https://dspace.mit.edu/oai/request"},"display":{"title":"The impact of accounting for research and development on innovation","abstract":"This paper examines whether a change in the accounting rule for research and development (R&D) cost is associated with changes in the innovation process. Specifically, I examine whether R&D expenditure, the number of patents per R&D dollar, and the number of citations per R&D dollar differ for firms that capitalize their R&D (capitalizers) relative to those that expense their R&D (expensers) after the issuance of Statement of Financial Accounting Standard (SFAS) 86, Accounting for the Cost of Computer Software to be Sold, Leased, or Otherwise Marketed. I find that relative to expensers, capitalizers increase their R&D expenditure post-SFAS 86. In addition, I find that the quality of innovation declines: post- SFAS 86, the total number of patent citations per R&D dollar decreases more for capitalizers than it does for expensers. This decline is consistent with managers of capitalizing firms taking advantage of SFAS 86 by over-investing in poor quality projects. Overall, the paper provides evidence that financial reporting can impact investments in innovation.","abstract_html":"This paper examines whether a change in the accounting rule for research and development (R&D) cost is associated with changes in the innovation process. Specifically, I examine whether R&D expenditure, the number of patents per R&D dollar, and the number of citations per R&D dollar differ for firms that capitalize their R&D (capitalizers) relative to those that expense their R&D (expensers) after the issuance of Statement of Financial Accounting Standard (SFAS) 86, Accounting for the Cost of Computer Software to be Sold, Leased, or Otherwise Marketed. I find that relative to expensers, capitalizers increase their R&D expenditure post-SFAS 86. In addition, I find that the quality of innovation declines: post- SFAS 86, the total number of patent citations per R&D dollar decreases more for capitalizers than it does for expensers. This decline is consistent with managers of capitalizing firms taking advantage of SFAS 86 by over-investing in poor quality projects. Overall, the paper provides evidence that financial reporting can impact investments in innovation.","abstract_has_math":false,"creators":["Li, Lei (Lynn Lei)"],"institution":"Massachusetts Institute of Technology","degree_name":null,"degree_level":null,"degree_discipline":null,"degree_department":"Sloan School of Management.","school":null,"contributors":[],"advisors":["John Core and Joseph Weber."],"committee_chairs":[],"committee_members":[],"year":2012,"date_issued":"2012","date_published":"2012","updated_at":"2026-07-22T22:20:55Z","subjects":["Sloan School of Management."],"languages":["eng"],"rights":["M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission."],"rights_urls":["http://dspace.mit.edu/handle/1721.1/7582"],"identifier_entries":[]},"links":{"outbound_url":"http://hdl.handle.net/1721.1/77822","outbound_label":"Handle","outbound_source":"dc:identifier.uri"},"metadata_groups":[{"id":"people","label":"People","entries":[{"key":"dc:contributor.advisor","label":"Advisor","values":["John Core and Joseph Weber."]},{"key":"dc:contributor.department","label":"Department","values":["Sloan School of Management."]},{"key":"dc:contributor.other","label":"Dc Contributor Other","values":["Sloan School of Management."]},{"key":"dc:creator","label":"Author","values":["Li, Lei (Lynn Lei)"]}]},{"id":"academic_context","label":"Academic Context","entries":[{"key":"dc:date.accessioned","label":"Dc Date Accessioned","values":["2013-03-13T15:51:17Z"]},{"key":"dc:date.available","label":"Dc Date Available","values":["2013-03-13T15:51:17Z"]},{"key":"dc:date.issued","label":"Date","values":["2012"]},{"key":"dc:publisher","label":"Institution","values":["Massachusetts Institute of Technology"]},{"key":"dc:type","label":"Dc Type","values":["Thesis"]}]},{"id":"subjects_keywords","label":"Subjects and Keywords","entries":[{"key":"dc:subject","label":"Dc Subject","values":["Sloan School of Management."]}]},{"id":"language_rights","label":"Language and Rights","entries":[{"key":"dc:language.iso","label":"Language (ISO)","values":["eng"]},{"key":"dc:rights","label":"Dc Rights","values":["M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission."]},{"key":"dc:rights.uri","label":"Rights URI","values":["http://dspace.mit.edu/handle/1721.1/7582"]}]},{"id":"identifiers","label":"Identifiers","entries":[{"key":"dc:identifier.uri","label":"Identifier URI","values":["http://hdl.handle.net/1721.1/77822"]}]},{"id":"additional","label":"Additional Metadata","entries":[{"key":"dc:description","label":"Description","values":["Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, 2012.","Cataloged from PDF version of thesis.","Includes bibliographical references (p. 48-51)."]},{"key":"dc:description.abstract","label":"Abstract","values":["This paper examines whether a change in the accounting rule for research and development (R&D) cost is associated with changes in the innovation process. Specifically, I examine whether R&D expenditure, the number of patents per R&D dollar, and the number of citations per R&D dollar differ for firms that capitalize their R&D (capitalizers) relative to those that expense their R&D (expensers) after the issuance of Statement of Financial Accounting Standard (SFAS) 86, Accounting for the Cost of Computer Software to be Sold, Leased, or Otherwise Marketed. I find that relative to expensers, capitalizers increase their R&D expenditure post-SFAS 86. In addition, I find that the quality of innovation declines: post- SFAS 86, the total number of patent citations per R&D dollar decreases more for capitalizers than it does for expensers. This decline is consistent with managers of capitalizing firms taking advantage of SFAS 86 by over-investing in poor quality projects. Overall, the paper provides evidence that financial reporting can impact investments in innovation."]},{"key":"dc:description.degree","label":"Dc Description Degree","values":["Ph.D."]},{"key":"dc:title","label":"Title","values":["The impact of accounting for research and development on innovation"]}]}],"canonical_facts":{"dc:contributor.advisor":["John Core and Joseph Weber."],"dc:contributor.department":["Sloan School of Management."],"dc:contributor.other":["Sloan School of Management."],"dc:creator":["Li, Lei (Lynn Lei)"],"dc:date.accessioned":["2013-03-13T15:51:17Z"],"dc:date.available":["2013-03-13T15:51:17Z"],"dc:date.issued":["2012"],"dc:description":["Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, 2012.","Cataloged from PDF version of thesis.","Includes bibliographical references (p. 48-51)."],"dc:description.abstract":["This paper examines whether a change in the accounting rule for research and development (R&D) cost is associated with changes in the innovation process. Specifically, I examine whether R&D expenditure, the number of patents per R&D dollar, and the number of citations per R&D dollar differ for firms that capitalize their R&D (capitalizers) relative to those that expense their R&D (expensers) after the issuance of Statement of Financial Accounting Standard (SFAS) 86, Accounting for the Cost of Computer Software to be Sold, Leased, or Otherwise Marketed. I find that relative to expensers, capitalizers increase their R&D expenditure post-SFAS 86. In addition, I find that the quality of innovation declines: post- SFAS 86, the total number of patent citations per R&D dollar decreases more for capitalizers than it does for expensers. This decline is consistent with managers of capitalizing firms taking advantage of SFAS 86 by over-investing in poor quality projects. Overall, the paper provides evidence that financial reporting can impact investments in innovation."],"dc:description.degree":["Ph.D."],"dc:identifier.uri":["http://hdl.handle.net/1721.1/77822"],"dc:language.iso":["eng"],"dc:publisher":["Massachusetts Institute of Technology"],"dc:rights":["M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission."],"dc:rights.uri":["http://dspace.mit.edu/handle/1721.1/7582"],"dc:subject":["Sloan School of Management."],"dc:title":["The impact of accounting for research and development on innovation"],"dc:type":["Thesis"]},"updated_at":"2026-07-22T22:20:55Z"}