Narrow Results

Today’s hypercompetitive economy challenges chief executive officers (CEOs) to make complex yet integral investments in research and development (R&D). Although research has widely discussed R&D spending due to its implications for competitive advantage, it omits whether and how managers’ dynamic capabilities materialise in these long-term investment decisions. This study builds on dynamic managerial capability (DMC) theory to argue that strong managerial-level dynamic capabilities increase R&D spending by improving the capacities of CEOs to sense opportunities and threats, seize them, and reconfigure organisational resources. CEO founder status is additionally proposed as a moderator of this relationship, as founder CEOs differ from professional CEOs in their investment behaviour. The results reveal that DMCs only compositely contribute to R&D investments, while the DMC subcomponents–except for managerial social capital—exert no isolated effects. This study also finds that founder CEOs realise higher R&D investments through their DMCs than their professional counterparts.

Using the green patent data of A-share listed companies in China’s heavy pollution industry from 2011 to 2020, this paper empirically tests the effect of tax reduction on the green innovation level of enterprises. The findings are as follows: First, tax reduction can significantly improve the level of green innovation. Second, R&D investment is one of the influencing mechanisms of tax reduction to improve the level of green innovation. Third, the incentive effect of tax reduction on the green innovation level of enterprises is more significant in non-state-owned enterprises, and the green innovation level increases by about 3.013% for every 1% reduction in tax burden. Fourthly, after the robustness test, the conclusion of the paper still stands. Finally, this paper puts forward some suggestions on how tax reduction can improve enterprise green innovation.

This paper utilizes path analysis, an approach common in behavioral and natural science literatures but relatively unseen in finance and accounting, to improve inferences drawn from a combined database of financial and non-financial information. Focusing on the revenue generating activities of Internet firms, this paper extends the literature on Internet valuation while addressing the potentially endogenous and multicollinear nature of the Internet activity measures applied in their tests. Results suggest that both SG&A and R&D have significant explanatory power over the web activity measures, suggestive that these expenditures represent investments in product quality. Evidence from the path analysis also indicates that both accounting and non-financial measures, in particular SG&A and pageviews, are significantly associated with firm revenues. Finally, this paper suggests other areas of accounting research which could benefit from a path analysis approach.

This paper utilizes path analysis, an approach common in behavioral and natural science literatures but relatively unseen in finance and accounting, to improve inferences drawn from a combined database of financial and non-financial information. Focusing on the revenue generating activities of Internet firms, this paper extends the literature on Internet valuation while addressing the potentially endogenous and multicollinear nature of the Internet activity measures applied in their tests. Results suggest that both SG&A and R&D have significant explanatory power over the web activity measures, suggestive that these expenditures represent investments in product quality. Evidence from the path analysis also indicates that both accounting and non-financial measures, in particular SG&A and pageviews, are significantly associated with firm revenues. Finally, this paper suggests other areas of accounting research which could benefit from a path analysis approach.