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dc.contributor.authorPercy, Majella
dc.contributor.authorSmith, D.
dc.contributor.authorRichardson, G.
dc.date.accessioned2010-02-03
dc.date.accessioned2015-02-02T04:16:11Z
dc.date.accessioned2017-03-02T00:52:18Z
dc.date.available2015-02-02T04:16:11Z
dc.date.available2017-03-02T00:52:18Z
dc.date.issued2001
dc.identifier.issn9780762307999
dc.identifier.doi10.1016/S0897-3660(01)14004-3
dc.identifier.urihttp://hdl.handle.net/10072/66021
dc.description.abstractThis 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.
dc.description.peerreviewedYes
dc.description.publicationstatusYes
dc.publisherElsevier
dc.publisher.placeUnited States
dc.relation.ispartofpagefrom15
dc.relation.ispartofpageto46
dc.relation.ispartofjournalAdvances in International Accounting
dc.relation.ispartofvolume14
dc.subject.fieldofresearchInternational Accounting
dc.subject.fieldofresearchAuditing and Accountability
dc.subject.fieldofresearchAccounting, Auditing and Accountability
dc.subject.fieldofresearchcode150104
dc.subject.fieldofresearchcode150102
dc.subject.fieldofresearchcode1501
dc.titleDiscretionary Capitalization Of R&D: Evidence On The Usefulness In An Australian And Canadian Context
dc.typeJournal article
dc.type.descriptionC1 - Articles
dc.type.codec1x
gro.facultyGriffith Business School
gro.hasfulltextNo Full Text
gro.griffith.authorPercy, Majella


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