Table 8

Difference in future profitability among opportunistic capitalization, normal capitalization and expense-all firms

Return on assetsReturn on equity
ROAi,t+1ROAi,t+2ROAi,t+3ROEi,t+1ROEi,t+2ROEi,t+3
OTCi,t−0.005***−0.007**−0.011***−0.010***−0.013***−0.024***
(−3.01)(−2.52)(−3.47)(−3.11)(−2.86)(−4.04)
RDCi,t−0.007***−0.007***−0.005**−0.013***−0.014***−0.010***
(−6.82)(−4.72)(−2.44)(−6.94)(−5.30)(−2.93)
ROAi,t0.563***0.468***0.400***   
(34.38)(22.24)(14.78)   
ROEi,t   0.502***0.373***0.319***
   (32.41)(16.90)(12.08)
Sizei,t0.006***0.005***0.005***0.013***0.013***0.012***
(11.32)(6.35)(4.04)(12.38)(7.95)(5.56)
Levi,t−0.032***−0.033***−0.026***−0.0080.0020.016
(−11.22)(−7.40)(−4.56)(−1.58)(0.30)(1.55)
MBi,t0.012***0.008***0.005**0.023***0.018***0.012***
(11.44)(4.86)(2.26)(11.77)(5.90)(2.97)
Growthi,t0.008***−0.006*−0.018***0.021***−0.002−0.026***
(3.57)(−1.82)(−4.39)(5.19)(−0.30)(−3.55)
RDinti,t0.492***0.578***0.627***1.027***1.300***1.270***
(13.11)(10.86)(8.59)(15.71)(13.85)(10.05)
Constant−0.101***−0.053**−0.072**−0.241***−0.209***−0.218***
(−7.09)(−2.40)(−2.56)(−9.55)(−5.89)(−3.85)
Fixed Effects
IndustryYESYESYESYESYESYES
YearYESYESYESYESYESYES
# of Obs.11,1108,2245,89911,1108,1945,868
Adj. R20.5090.3460.2520.4150.2600.189

Note(s): All variables are defined in Appendix. The robust t statistics shown in parentheses are based on the firm-clustered standard errors. *, ** and *** represent the statistical significance level of 10%, 5% and 1%, respectively

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