Effects of Firm Size, Financial Leverage and R&D Expenditures on Firm Earnings: An Analysis Using Quantile Regression Approach

Citation metadata

Date: June 2011
From: ABACUS(Vol. 47, Issue 2)
Publisher: Wiley Subscription Services, Inc.
Document Type: Article
Length: 216 words

Document controls

Main content

Abstract :

To authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1467-6281.2011.00338.x Byline: MING-YUAN LEON LI (1), NEN-CHEN RICHARD HWANG (2) Keywords: Financial leverage; Firm life cycle; Firm size; Quantile regression; R&D expenditures; Return on equity Abstract: As documented in the literature, the effects of firm size, financial leverage, and R&D expenditures on firm earnings are inclusive. Our hypothesis is that the inconsistent empirical results of such effects may be driven by the regression models implemented in data analysis. Using the quantile regression (QR) approach developed by Koenker and Basset (1978), this study analyses S&P 500 firms from 1996 to 2005. We find that the effects of firm size, financial leverage and R&D expenditures on firm earnings differ considerably across earnings quantiles. Comparing the results from the QR approach with those from the ordinary least squares (OLS) and least absolute deviation (LAD) methods, this study further explains the puzzling relationship between firm size, financial leverage, R&D expenditures and firm earnings. Author Affiliation: (1)National Cheng-Kung University (2)California State University Article note: M ing-Y uan L eon L i (lmyleon@mail.ncku.edu.tw) is a Professor of Finance in the Department of Accountancy, National Cheng-Kung University, and N en-C hen R ichard H wang a Professor of Accounting in the Department of Accounting and Finance, California State University, San Marcos.

Source Citation

Source Citation   

Gale Document Number: GALE|A257895662