Date of Award


Document Type


Degree Name

Master of Professional Accounting (MPAcc)


Master of Business Administration


Research and development (R&D) activity averages about 2.5 percent of sales and 50 percent of net income across the economy in the United States (Madden ,1972). In Japan, the R&D expenditures average about 180 percent of net profits (Mande et al., 1996). According to a recent report from OECD (Organization for Economic Co‐operation and Development), in 1993, the gross domestic expenditure on R&D was $166,299,000,000 in the United States, compared with $122,567,000,000 in Japan. Due to its significance, the topic of R&D has come under close examination in recent years. This study will add insights by comparing the R&D expenditures of U.S. firms and Japanese firms. The following major conclusions are drawn from the evidence presented in this study: 1. The stock of R&D capital of U.S. firms is larger than that of Japanese firms. This conclusion is against popular opinion that Japanese firms have a long term orientation and are more efficient with R&D expenditures. 2. Annual R&D expenditures have a statistically significant relation with future sales in both Japan and the United States. This evidence has significant implications for accounting standards setting in both countries. 3. The R&D capitalization process developed in this study yields statistically reliable estimates of the amortization rate of R&D capital for the U.S. firms.


A Thesis Presented to the Department of Professional Accounting and the Faculty of the Graduate College University of Nebraska In Partial Fulfillment of the Requirements for the Degree Master of Professional Accounting University of Nebraska at Omaha. Copyright Dongxin Luo December 16th, 1996