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

Michael T. Dugan, John E. McEldowney (), Elizabeth H. Turner () and Clark M. Wheatley ()
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Michael T. Dugan: Knox School of Accountancy, Augusta University, Augusta, USA
John E. McEldowney: Department of Accounting & Finance, University of North Florida, Florida, USA
Elizabeth H. Turner: Department of Accounting, University of Texas Rio Grande Valley, USA
Clark M. Wheatley: School of Accounting, Florida International University, Florida, USA

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2016, vol. 19, issue 04, 1-36

Abstract: 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.

Keywords: Accounting quality; research & development; IFRS; U.S. GAAP (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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DOI: 10.1142/S0219091516500259

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