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.
"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
, Article 18.
Available at: https://scholars.fhsu.edu/jbl/vol2/iss1/18