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JOURNAL OF ACCOUNTING AND FINANCE
R&D Uncertainty in Future Benefits
Author(s): Ozer Asdemir, Mohammed H. A. Mufti, Fareed O. Sheikh
Citation: Ozer Asdemir, Mohammed H. A. Mufti, Fareed O. Sheikh, (2012) "R&D Uncertainty in Future Benefits," Vol. 12, Iss. 3, pp. 148 - 161
Article Type: Research paper
Publisher: North American Business Press
Abstract:
This paper contributes to the current debate on accounting treatment of R&D expenditures. We considered two different measures of future benefits to a firm, sales revenue and operating cash flows. We provide evidence that R&D expenditures do not generate more uncertain future sales revenue or operating cash flows compared to capital expenditures. In terms of sales revenue, R&D expenditures generate significantly less uncertain future benefits compared to capital expenditures. And in terms of operating cash flows, our results do not provide conclusive evidence that whether R&D expenditures generate more uncertain future benefits than capital expenditures or not.
