We show that, contrary to popular belief, capital markets do not drive short-termism. By comparing public and private European firms in countries with different institutional infrastructures, we show that being listed in the stock market plays a positive role in a firm’s investment policies,...

We examine how capitalization vs expensing of R&D costs affects how the firm manages earnings with R&D, and the economic consequences of the earnings management method. We focus on the period around the UK’s switch from UK GAAP, which allowed expensing, to IFRS, which mandated capitalization...