The Impact of Different Accounting Reporting Methods on the Informativeness of Research and Development Costs: IFRS Compared to U.S. GAAP

In this paper, we examine the information content and value relevance of research and development (R&D) costs before and after the SEC eliminated the 20-F reconciliation to U.S. GAAP for Foreign Public Issuers (FPIs). Prior to the elimination both FPIs and U.S. firms experienced an increase in t...

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Bibliographic Details
Published inReview of Pacific basin financial markets and policies Vol. 19; no. 4; p. 1
Main Authors Dugan, Michael T, McEldowney, John E, Turner, Elizabeth H, Wheatley, Clark M
Format Journal Article
LanguageEnglish
Published Singapore World Scientific Publishing Co. Pte., Ltd 01.12.2016
Subjects
Comparative analysis
Cost accounting
Disclosure
GAAP
International Financial Reporting Standards
R&D
Research & development
Research & development expenditures
Studies
United States > US
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Summary:In this paper, we examine the information content and value relevance of research and development (R&D) costs before and after the SEC eliminated the 20-F reconciliation to U.S. GAAP for Foreign Public Issuers (FPIs). Prior to the elimination both FPIs and U.S. firms experienced an increase in the indirect effect of R&D on operating income. After the requirement was eliminated, the direct effect increased for FPIs and the indirect effect decreased. This is in contrast to U.S. firms who experienced a continued increase in the indirect effect. This shift indicates there was a loss of informativeness in the R&D disclosures for FPIs. [web URL: http://www.worldscientific.com/doi/abs/10.1142/S0219091516500259]
ISSN:0219-0915
1793-6705