In-Process R&D (IPRD) Write-off Misclassifications In Compustat: An Econometric Evaluation

Authors

Lolita Paff, Penn State Berks

Abstract

Over the period 1994-1999, for a sample of 57 firms, in-process research and development (IPRD) costs write-offs were reported in the 10-Ks of approximately 12% of the observations. The IPRD amounts ranged from $230,000 to over $16 7 million. In 38% of these cases, Compustat overstated R&D expense by including the IPRD write-off Comparative econometric estimates obtained show larger parameter coefficients when the Compustat's R&D expense data was used. This suggests prior research on R&D tax credit effectiveness based on Compustat data may have been upwardly biased, overstating the tax credit's incentive effects. Policy implications and directions for future research are discussed.

Volume

2

Issue

1

First Page

158

Last Page

169

DOI

10.58809/AKCP5412

Comments

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Rights

© Fort Hays State University

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.

Recommended Citation

Paff, Lolita (2006) "In-Process R&D (IPRD) Write-off Misclassifications In Compustat: An Econometric Evaluation," Journal of Business & Leadership: Research, Practice, and Teaching (2005-2012): Vol. 2: No. 1, Article 18.
DOI: 10.58809/AKCP5412
Available at: https://scholars.fhsu.edu/jbl/vol2/iss1/18