• myGriffith
    • Staff portal
    • Contact Us⌄
      • Future student enquiries 1800 677 728
      • Current student enquiries 1800 154 055
      • International enquiries +61 7 3735 6425
      • General enquiries 07 3735 7111
      • Online enquiries
      • Staff phonebook
    View Item 
    •   Home
    • Griffith Research Online
    • Journal articles
    • View Item
    • Home
    • Griffith Research Online
    • Journal articles
    • View Item
    JavaScript is disabled for your browser. Some features of this site may not work without it.

    Browse

  • All of Griffith Research Online
    • Communities & Collections
    • Authors
    • By Issue Date
    • Titles
  • This Collection
    • Authors
    • By Issue Date
    • Titles
  • Statistics

  • Most Popular Items
  • Statistics by Country
  • Most Popular Authors
  • Support

  • Contact us
  • FAQs
  • Admin login

  • Login
  • Discretionary Capitalization Of R&D: Evidence On The Usefulness In An Australian And Canadian Context

    Author(s)
    Percy, Majella
    Smith, D.
    Richardson, G.
    Griffith University Author(s)
    Percy, Majella
    Year published
    2001
    Metadata
    Show full item record
    Abstract
    This study addresses the discretionary capitalization of R&D costs in Australia and Canada. We demonstrate, for both samples, that the discretionary capitalization of development costs (hereafter capitalized D) by the manager results in balance sheet and income numbers that are more highly associated with market value, relative to the corresponding "asif" numbers generated by expensing GAAP. Moreover, we show that a dollar worth of capitalized D is worth more than a dollar worth of expensed R&D, for the same firm. This points to a corroboration role for capitalization. As a caveat, our results hold only when the samples are ...
    View more >
    This study addresses the discretionary capitalization of R&D costs in Australia and Canada. We demonstrate, for both samples, that the discretionary capitalization of development costs (hereafter capitalized D) by the manager results in balance sheet and income numbers that are more highly associated with market value, relative to the corresponding "asif" numbers generated by expensing GAAP. Moreover, we show that a dollar worth of capitalized D is worth more than a dollar worth of expensed R&D, for the same firm. This points to a corroboration role for capitalization. As a caveat, our results hold only when the samples are partitioned on the materiality of capitalized D. Our results point to a potentially useful signalling role for discretionary capitalization, in Australian and Canadian capital markets. However, while the manager’s capitalized D is associated with firm value, it has at best a modest advantage over what the analyst can do, using the researchercreated capitalized R&D. Thus, the regulatory policy debate must consider the small incremental benefits from allowing discretionary capitalization compared to the costs associated with earnings management when discretion is allowed.
    View less >
    Journal Title
    Advances in International Accounting
    Volume
    14
    DOI
    https://doi.org/10.1016/S0897-3660(01)14004-3
    Subject
    International Accounting
    Auditing and Accountability
    Accounting, Auditing and Accountability
    Publication URI
    http://hdl.handle.net/10072/66021
    Collection
    • Journal articles

    Footer

    Disclaimer

    • Privacy policy
    • Copyright matters
    • CRICOS Provider - 00233E

    Tagline

    • Gold Coast
    • Logan
    • Brisbane - Queensland, Australia
    First Peoples of Australia
    • Aboriginal
    • Torres Strait Islander