Journal article
Financing Corporate R&D in the United States Using a Special Purpose Entity and the Political Economy of Accounting Regulation
International research journal of applied finance, Vol.6(8), pp.530-557
01 Aug 2015
Abstract
Firms in the science- and technology-based industries in the United States have been abstaining, since the year 1999, from using an evidently efficient special purpose entity (SPE) to finance R&D projects, known by SWORD. It comprises: (1) an options' approach to investment which preserves these firms' other specific and tacit R&D capital from bankruptcy; and (2) an innovative financial structure which considers the information asymmetry, agency costs and high specificity that characterize R&D and, accordingly, improves its funding. The reason for this abstention is FASB's misinterpretation of its economic and legal reality. The SWORD case illustrates that the accounting regulatory environment over the past decade has been an impediment for the formation of at least one type of efficient SPEs, perhaps many more, but not an impediment for several infamous abusive types. Stimulating corporate R&D requires a larger arsenal of efficient financing methods, not fewer.
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Details
- Title
- Financing Corporate R&D in the United States Using a Special Purpose Entity and the Political Economy of Accounting Regulation
- Creators
- Samuel SzewczykAlexandra TheodossiouZaher Zantout
- Publication Details
- International research journal of applied finance, Vol.6(8), pp.530-557
- Publisher
- International Research Journal of Applied Finance
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Finance
- Identifiers
- 991021881389104721