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. / 10000-01-01

Canada has long been a proponent of free trade while at the same time defending the current supply management system that protects the dairy industry from import competition. In the most recent Doha Development Round of talks amongst nations belonging to the World Trade Organization, the validity of Canada's protectionist position has been questioned and it is conceivable that Canada may have to make significant changes in the dairy industry to allow more liberal trade policies to be enacted. The key purpose of this study is to find out how free trade will affect the research and development (R&D) incentives of Canadian dairy farmers. On one hand they may be induced to perform more R&D due to competition effects in order to lower costs and achieve a competitive advantage over the main competitor, the United States. On the other hand they may be induced to perform less R&D due to the spillover effect, which allows the Canadian R&D efforts to be used by the United States at no additional cost. It is found that the outcome of these two opposing forces depends on the market scale effect. If Canada is a net importer when the border opens the spillover effect may dominate and Canadian dairy producers may invest less into R&D than under the current protectionist policies. These results however will switch if Canada is found to be the net exporters. The results also depend on the level of the quota currently in place. If the current quota is chosen at a quantity relatively close to the amount supplied at the monopolistic level, a free trade regime may promote R&D efforts more so than supply management. On the other hand, if the current quota level in Canada is closer to the quantity that would be supplied in a competitive industry, Canadian dairy producers may invest less heavily in R&D efforts under a free trade regime than a supply management system. / Land and Food Systems, Faculty of / Graduate

Using data from the Kauffman Firm Survey (KFS), this thesis explores the effects that innovation activities has on the survival of new firms. The KFS follows 4,928 American start-ups from 2004 to 2011. A probit model is used to examine the relationships that may exist between a number of different variables relating to innovation and survival. The results indicate that firms that invest in research and development (R&D) and machinery and equipment persistently are more likely to survive than those that do not, or those that only invest once in these types of innovative business activities. Also, with regards to intellectual property (copyrights, trademarks and patents), firms that hold these types of intellectual property have a better chance of survival than those that do not hold any intellectual property.

Chapter 1: Tradable Permits under Environmental and Cost-reducing R&D: This chapter models simultaneous investments in both environmental and cost-reducing R&D by asymmetric Cournot duopolist. Pollution rights (emission permits) are allocated by the regulator and can be traded between firms. Both R&D competition and cooperation are considered. In a three-stage game, firms first invest in R&D, then trade permits, and then compete in output. The strategic interaction between different types of R&D investments is analyzed. It is found that giving more permits to one firm induces it to conduct more cost-reducing but less environmental R&D. The second-best optimal allocation of pollution rights is also analyzed. This allocation matters for social welfare under R&D competition, but is irrelevant under R&D cooperation. Moreover, the optimal allocation depends on R&D spillovers. This paper also studies the grandfathering of permits based on historical output. Compared with the second-best optimal allocation, the higher the emissions reduction level, the more likely that grandfathering allocates too few permits to the large firm and too many permits to the small firm. Adding an R&D budget constraint leads firms to under-invest in cost-reducing R&D relative to environmental R&D. Chapter 2: Tradable Permits under Environmental R&D between Upstream and Downstream Industries: This chapter models the simultaneous investments in environmental R&D by both downstream and upstream industries, with two symmetric firms within each industry competing à la Cournot. Pollution rights are allocated by the regulator, and firms can trade permits. R&D competition, intra-industry (horizontal), inter-industry (vertical) and both intra- and inter-industry (generalized) R&D cooperations are considered. In a four-stage game, firms first invest in R&D, then trade permits, then upstream firms compete in intermediate good production, and finally downstream firms compete in final food production. The strategic interactions between R&D investments are analyzed. It is found that an increase in either vertical or horizontal R&D spillovers reduce the permit price but increase production, but the spillover effects on R&D investments are ambiguous and they depend on the number of permits that a firm receives from the government. However, firms undertake more R&D under generalized cooperation than vertical cooperation, irrespective of spillovers and the allocation of permits, and this results in higher social welfare under generalized cooperation than vertical cooperation. The optimal allocation of pollution rights by the regulator is also considered. This allocation matters for social welfare under R&D competition and horizontal cooperation, but is irrelevant under vertical and generalized cooperations. Chapter 3: Is There a Principle of Targeting in Environmental Taxation?: This chapter studies whether the "principle of targeting", which is referred to by Dixit (1985) as the tax formulae for dirty goods have "additivity property" (Sandmo 1975) and externality-generating sources should be directly targeted (Bhagwati and Johnson 1960), can be applicable in the presence of a uniform commodity tax with an additional emissions tax. We consider three perfectly competitive markets, one of them produces a non-polluting good and the other two produce polluting goods. The regulator chooses optimal taxes on all three markets to maximize social welfare and finances an exogenous public expenditure. First all, it is found that the additivity property does not hold under differentiated taxes, and is even further weakened with a uniform commodity tax. It is also shown that the Pigouvian tax is unlikely to apply on the top of the uniform commodity tax. Furthermore, if there is only tax instrument available -- i.e. either the uniform commodity tax or the emissions tax -- then the uniform commodity tax (emissions tax) induces higher social welfare when marginal social damage is low (high).

Background: As the global pharmaceutical industry continues to generate significant wealth, the demand for equitable access to medicine remains at the forefront of political and grassroots agendas. In recent years, poor drug coverage coupled with unaffordable drug prices have contributed to access issues for a growing number of Canadians (Morgan et al, 2015). Although the industry cites various reasons for an increase in cost, such as high-risk research, lengthy clinical trials and significant advances in technology (DiMasi et al., 2016; Ridley, 2005), there is a growing body of research that is contradictory to the industry’s reasoning for higher drug costs (Kohler et al., 2016; Siddiqui & Rajkumar, 2012; Light & Warburton, 2011). Whereas other initiatives to date focus on drug coverage, this work proposes the Canadian Government investigate the feasibility of the public production and distribution of pharmaceuticals. Thus, the research question addresses whether successful publicly funded pharmaceutical research and development initiatives, including production and distribution, could be applicable in the Canadian pharmaceutical sector where inequity is an issue. A scoping review was conducted to draw in all relevant literature on publicly funded research models pertaining to the research and development of pharmaceuticals. Methods: The research undertaken for this thesis is exploratory and comprised of qualitative work that is guided by the Arksey & O’Malley (2005) scoping review methodological framework. The data collected for the scoping review was analyzed with the thematic analysis method. Findings: Following the thematic analysis, three key themes were identified: Local Production, Public Private Sector and National Production. Although there have been some successes in low to middle income countries with regard to the local production of medicine, the likelihood of success is contingent on whether there is a need to import active pharmaceutical ingredients (API). With regard to the public and private sector, the pre-competitive sphere serves as the typical space for collaboration. The public sector typically conducts research, whereas the private sector oversees drug development. The national production of medicine is underpinned by government intervention, which is evidenced by the varied measures taken to increase access to medicine. The preliminary literature review revealed that an Advisory Council was created to assess the viability of Pharmacare 2020. This council may be used to conduct the necessary research to assess the feasibility and strategy of publicly producing pharmaceuticals in Canada. Conclusions: Healthcare inequity that is linked to unaffordable medicine is exacerbated by poor drug coverage. The findings revealed that considerable investment into infrastructure, a strong civil society that pressures the government to act, and a pharmaceutical sector characterized by high prices may encourage a government to produce medicine when faced with a health crisis. Further findings revealed that API production may prevent a country from feasibly producing medicine. Considering Canada’s standing as an industrialized and developed nation with access to state-of-the-art public infrastructure, in addition to a pharmaceutical market characterized by high drug prices and a strong civil society sector, the Canadian Government is in a likely position to produce medicine. However, the necessary research must be conducted to assess whether such an endeavour is feasible. / Thesis / Master of Science (MSc) / As the global pharmaceutical industry continues to generate significant wealth, the demand for equitable access to medicine remains at the forefront of political and grassroots agendas. In recent years, poor drug coverage coupled with unaffordable drug prices have contributed to access issues for a growing number of Canadians (Morgan et al, 2015). Although the industry cites various reasons for an increase in cost, such as high-risk research, lengthy clinical trials and significant advances in technology (DiMasi et al., 2016; Ridley, 2005), there is a growing body of research that is contradictory to the industry’s reasoning for higher drug costs (Kohler et al., 2016; Siddiqui & Rajkumar, 2012; Light & Warburton, 2011). Whereas other initiatives to date focus on drug coverage, this work proposes the Canadian Government investigate the feasibility of the public production and distribution of pharmaceuticals. Thus, the research question addresses whether successful publicly funded pharmaceutical research and development initiatives, including production and distribution, could be applicable in the Canadian pharmaceutical sector where inequity is an issue. A scoping review was conducted to draw in all relevant literature on publicly funded research models pertaining to the research and development of pharmaceuticals.

La littérature économique défend l'existence d'aides publiques à la R&D privée du fait des nombreuses externalités et distorsions qui conduiraient les firmes à sous-investir en R&D. La multiplication de ces aides à différents échelons territoriaux et l'apparition d'éléments plus contrastés concernant leur justification soulignent un besoin accru d'analyse de ces politiques et de leurs conséquences territoriales. L'objet de cette thèse est d'apporter de nouveaux éléments concernant la rationalité, les effets et l'efficacité des aides financières à la R&D privée.Le premier chapitre propose une discussion de la rationalité des aides financières à la R&D à partir de la littérature sur la croissance endogène et ses raffinements incluant une dimension géographique. Le décalage entre les approchesthéoriques et les approches empiriques concernant les origines et l'ampleur du sous-investissement des firmes en R&D fait plutôt ressortir l'hypothèse d'un sous-investissement limité et spécifique.Les chapitres 2 et 3 fournissent des analyses théoriques des effets dynamiques et spatiaux d'une politique centralisée de subvention à la R&D. Les résultats montrent que cette politique renforce la croissance économique, réduit les inégalitésterritoriales et améliore le bien-être global. Les bienfaits de ce type de politique sont non seulement dépendants de l'hypothèse retenue concernant les rendements de la R&D mais surtout des options retenues concernant le financement et l'allocation géographique des subventions. Le chapitre 4 fournit une analyse empirique de la capacité des aides financièresà la R&D à stimuler l'investissement privé en R&D, à partir d'un panel de pays de l'OCDE. Les résultats indiquent une sensibilité plus forte des investissements privés en R&D aux aides indirectes (incitations fiscales) qu'aux aides directes (subventions) et suggèrent l'existence d'effets de substitution entre ces deux types d'aides. / The economie literature largely defends the existence of financial supports to private R&D owing to the numerous externalities and distortions that lead firms to underinvest in R&D. The proliferation of these supports at different territorial levels and the recent emergence of more constrasting arguments concerning their rationale underline an increasing need for the analysis of these policies and the ir territorial impacts. The purpose of this PhD thesis is to provide new elements regarding the rationale, the effects and the effectiveness of financial supports to private R&D.The first chapter proposes a discussion on the ratio na le of financial supports to business R&D following the endogenous growth literature and its refinements including a geographical dimension. Divergences in the theoretical and empirical approaches concerning the origins and the magnitude of the private underinvestment in R&D eventually leads to the hypothesis of a limited and specifie private underinvestment in R&D.Chapters 2 and 3 provide theoretical analyses of the spatial and dynamics effects of a centralized subsidy policy for R&D. The results show that this policy strengthens economie growth, reduces territorial inequalities while improving the global welfare. The benefits of such policy are not only dependent on the chosen assumption about returns to R&D but more importantly on its design in terms of funding and geographical allocation of subsidies.Chapter 4 provides an empirical analysis of the capacity of financial supports to R&D to stimulate private investment in R&D from a panel of OECD countries.The results indicate a greater sensitivity of private investment in R&D to indirect supports (fiscal incentives) than to direct supports (grants and subsidies) and suggest the existence of substitution effects between these two forms of support.

Despite the huge sum of money that is being spent on research and development (R & D) on yearly basis by firms, very few empirical studies exist to shed more lights about the effects of this practice on firm performance. However, the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) in their publication of International Accounting Standard (IAS) 38, require that expenditures incurred during R & D should either be expensed in the statement of comprehensive income or capitalized as an intangible asset in the statement of financial position provided certain criteria are fulfilled (IASB, 2012, p. 1045).Therefore, the main purpose of this study is to investigate the impact of expensed R & D and/or capitalized R & D on firm performance METHOD: Data for the study was collected from the audited financial statements of firms listed at the London Stock Exchange as well as from the website of this stock market. Two sampling techniques were utilized in the study; namely stratified sampling and random sampling. Stratified sampling technique was used to stratify the companies into various industries while random sampling was used to randomly select firms that are engaged in R & D from each of these industries. The final sample consisting of 52 firms gave a total of 260 observations for a period of 5 years between December 31st, 2007 to December 31st, 2011.Expensed R & D and capitalized R & D were obtained by taking the averages of statement of comprehensive income R & D to Revenue and statement of financial position R & D to revenue respectively. Moreover, firm performance was measured using accounting-based indicators which were Return on Asset (ROA), Return on Capital Employed (ROCE), Dividend Yield (DY), Dividend Cover (DC), Earnings per Share (EPS), Price Earnings Ratio (PE) and Capital Gearing Ratio (CGR). RESULTS: The results of the study show that expensed R & D has a significant positive impact on DC, a significant negative impact on EPS, positively correlated with CGR with no significant impact and negatively correlated with ROA, ROCE, DY and PE but had no significant impact. As concerns capitalized R & D, the results reveal that capitalized R & D has a significant negative impact on ROA, ROCE and EPS, positively correlated with CGR but have no significant impact and negatively correlated with DY, DC and PE as well though no significant impact was found.

Investments in R&D activities are essential to firms. Decisions to increase or decrease R&D investments may rely according to changes in macroeconomic factors. The purpose of this paper is: to examine how firms in the industries; manufacturing computers, electronics and optics and manufacturing electrical equipment, have increased or decreased their R&D investments, in conjunction with macro factors during the 2000s. The sample is 49 Swedish firms. This paper is based on quantitative firm-level panel data on R&D activity investments and aggregated quantitative macro-level data on macro factors. The firm-level panel data set has been put together completely from scratch, using collected and transformed raw data. Using a logistic regression model, the results show that macro factors do affect R&D investments on a micro-level, to some extent. Further, the results show that change in macro factors does to a greater extent, affect decreases in R&D investments than increases in R&D investments. The process of increase and decrease of R&D investment should be considered as two different dynamic processes. Increase and decrease do not follow the same pattern, thus a decrease of R&D investments is a more explicit decision than a decision to increase R&D investments.

This paper examines whether Swedish listed firms use research and development (R&D) accounting as a tool for income smoothing (hypothesis 1). One controversial accounting issue concerning R&D is that R&D capitalization could be influenced by earnings management purposes due to a subjective accounting treatment. We also examine whether firms´ degree of fluctuation in return on assets (ROA) has an effect on income smoothing behavior (hypothesis 2). Finally, we investigate if the level of flexibility allowed in the R&D accounting with the different accounting standards, BFN R1, RR 15 and IAS 38 has an effect on income smoothing behavior (hypothesis 3). We study the accounts for 21 firms for the years 1998-2000, 52 firms for 2002-2004 and 59 firms for 2007-2009. Using multiple regression analysis we find that the income smoothing hypothesis is supported in period two (2002-2004). The regression analysis also indicates that firms with low change in ROA tend to capitalize more R&D when they are less profitable than prior year. Our results also imply that the level of flexibility in different accounting standards does not have an effect on income smoothing behavior and hypothesis 3 is not supported.

La thèse traite de la manière dont des firmes multinationales (FMNs) historiquement occidentales, pilotent la dynamique de constitution des compétences nécessaires pour supporter leur stratégie de croissance et d’innovation, lorsque leur marché bascule depuis l’Europe vers l’Asie.La littérature sur le management de l’innovation dans les FMNs propose différents modèles d’organisation globale des processus d’innovation mais n’aborde pas la question de la dynamique de constitution de ces modèles, à partir d’une situation historique et d’une stratégie d’internationalisation spécifique.La thèse traite de cette question de la dynamique à partir d’une recherche interactive menée au sein de l’équipementier automobile mondial Valeo. Elle montre (i) que l’internationalisation en Chine constitue une triple rupture de vitesse, de volume ainsi que de contexte pour la FMN occidentale historique, (ii) que la stratégie mise en œuvre par la FMN en Chine depuis l’Europe permet de gérer la situation à court terme, mais n’est pas particulièrement propice à la constitution des compétences nécessaires aux équipes locales pour devenir progressivement autonomes.A partir d’un diagnostic des difficultés rencontrées, la thèse propose alors (i) au niveau micro, un modèle de reconception des dispositifs de formation dispensés, de manière à optimiser les apprentissages des collaborateurs chinois et favoriser le développement de leurs compétences, (ii) au niveau macro, une trajectoire d’optimisation du développement des compétences de R-I-D (Recherche, Innovation, Développement) dans la firme-réseau global, d’une part en Chine via la formation de formateurs locaux et la constitution de communautés de pratiques, d’autre part globalement via la constitution d’un véhicule organisationnel de type Université d’Entreprise, qui permettrait d’adresser, ensemble, les problématiques d’identification et d’attrait des talents, de montée en compétence, ainsi que d’engagement et de fidélisation. / This thesis focuses on the way multinational corporations (MNCs) develop and manage the required competences to sustain their innovation strategy when their market dynamism is shifting towards Asia.The literature presents various models to organize innovation processes globally but does not answer the question of their dynamic constitution based on a given situation.Drawing upon an interactive research conducted within Valeo – a worldwide automotive supplier – this thesis focuses on that dynamic dimension. It sheds light on how (i) China constitutes a disruptive experience for the Western MNC because of the speed and scale of the phenomenon, as well as the context, (ii) the strategy implemented by the MNC in China from Europe has helped to deal with the difficult situation in the short term, but is not the best way to develop the necessary competences locally to enable the local teams to become autonomous.We thus suggest: (i) at the micro level, a new way of designing training programs that involves shifting from a teaching-centered approach to a learning-centered approach, (ii) at the macro level, a trajectory to improve the constitution of R-I-D (Research, Innovation, Development) competences in the global firm, on the one hand in China via the coaching of local trainers and the development of communities of practice, and on the other hand globally via the constitution of an organizational vehicle such as a Corporate University, to address simultaneously learning and talent management issues – both individually & collectively, locally & globally, in-house & in link with the outside world.