Exploring the R&D Disclosure Environment

• Published in: Accounting horizons Vol. 13; no. 4; pp. 323 - 342
• Main Author: Entwistle, Gary M.
• Format: Journal Article
• Language: English
• Published: Sarasota, Fla Sarasota, FL :American Accounting Association, c1987 01.12.1999; American Accounting Association
• Subjects: Accounting; Annual reports; Companies; Competition; Competitive advantage; Disclosure; Executives; Financial performance; Financial reporting; Interviews; Net losses; Product development; R&D; Research & development; Research & development expenditures; Software; Studies; United States > US
• ISSN: 0888-7993; 1558-7975
• DOI: 10.2308/acch.1999.13.4.323

In this exploratory study, a series of interviews with analysts and firm executives, supplemented with an analysis of annual report disclosures, is used to provide insights into the research and development (R&D) disclosure environment within which technology-intensive firms operate. The interviews cover questions of interest to both professional and academic accounting audiences, including the types of R&D information which firms reveal and analysts use, managers' concerns with revealing proprietary or bad news R&D information, the potential benefits from effective R&D disclosure management, and views on deferring vs. expensing development expenditures. The content analysis provides a description of the quantity, subject matter, and location of the R&D disclosures contained in 113 Toronto Stock Exchange-listed firms' annual reports. Finally, the regression analysis explores the association between six disclosure environment factors (R&D expense proportion, accounting policy for development expenditures, [cross-] listing status, industry, capital structure, and firm size) and the amount of R&D disclosure firms provide.